Oil industry ‘optimistic’ about growth in 2019: survey

Three-quarters of senior oil and gas professionals expressed optimism about the sector’s growth in 2019 - their best outlook since the crude prices’ decline in 2014 - Bloomberg reported, citing a survey by energy and maritime services company, DNV GL AS.

Confidence across the energy industry is as same as in 2010, when Brent surged to $95 per barrel, about 50 percent higher compared to today’s level.

“Such confidence will echo higher spending, as 70 percent of professionals believe they will maintain or increase capital expenditure plans this year,” the report said.

“Growth will be important and there is a strong belief in new investment,” said Liv Hovem, chief executive officer of DNV GL’s oil and gas unit.

“They’re quite confident that there will be a demand for oil and gas going forward. They’re also confident about their competitiveness,” she added.

Data say that companies may face some risks. The last time the industry was this confident, spending soared. However, during 2014 the crude decline hit companies, crimping returns at many of their projects.

Throughout the downturn, executives focused on cutting spending. In 2016, 41 percent of those surveyed said “cost efficiency” was their highest priority. Now with prices back above $60 a barrel, just 21 percent say it’s the highest priority.

About half of companies said they saw price inflation in 2018, with the downstream portion of the industry hit worst. In the upstream segment, only a third of companies said prices increased.

Another challenge for the oil and gas business is its aging workforce which could leave roles which won’t be filled easily. Young people find the industry unappealing because they either think it’s old and polluting, or are drawn to other jobs at tech companies, the report said.

We need to be “explaining to the young generation the influence you have” by joining the sector, Hovem said. “Technology, and an uptick of every kind of digital tool, will make the industry more attractive.”

Digitization is the top research and development priority for the oil business in 2019, as companies see additional cost savings and safety benefits in automating processes. Meanwhile investment in low-carbon energy will be small, with most respondents saying regulations are the main motivation to spend in the sector.