BAKU, Azerbaijan, Nov.24
By Leman Zeynalova – Trend:
Oil and gas investments are expected to rise in the coming years, Trend reports with reference to Fitch Solutions.
“There has been an appreciable decline in oil and gas investment since the highs set back in 2014/5 when oil prices last broke USD100/bbl. Drives to improvement capital efficiency have helped reduce the unit cost of production and operation but that now leaves little room in today’s market for appreciable gains in output while spending less,” reads the report released by Fitch Solutions.
The company notes that investment is expected to rise in the coming years with state backed NOCs driving the bulk of growth.
“IOCs are likely to take a more measured approach but nonetheless raise capital expenditure to restore depleted reserves and increase production. Based on our current forecast to 2030 we have markets being well supplied for the majority of the decade. Spare capacity from OPEC+ coupled with available non-OPEC reserves in relatively low-cost regions (US shale and Guyana) combined give ample production volumes if tapped in medium term,” reads the report.
However, investment decisions would need to be made quite early in a cycle to prevent undersupply and based on today’s levels of capex it would seem more investment would be needed toward mid-decade, Fitch Solutions believes.
“Given the lack of exploration activity and success, the impact of under-investment might not been seen immediately but in the next cycle of prices driven exploration and development later in the decade,” the report says.
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