Investments in the oil and gas sector in the Middle East and North Africa (Mena) is expected to go up in 2019 on the back of increased spending by oil companies due to rise in oil prices, a latest survey by DNV GL shows.
DNV GL, which is a technical advisor to the oil and gas industry interviewed hundreds of senior oil and gas professionals to gauge their opinion about the growth of the industry in 2019.
Of the nearly 800 senior oil and gas professionals surveyed, 83 per cent of them expressed confidence about the growth of the industry this year, compared to 63 per cent last year, the survey findings show.
“This research shows the industry in the Middle East and North Africa gearing up to dominate global oil and gas production for decades to come,” said Ben Oudman, Regional Manager, Continental Europe, Middle East, East Africa and India, DNV GL -Oil & Gas in a statement.
“It aligns with DNV GL’s September 2018 Energy Transition Outlook (ETO) forecasting that more than half of conventional onshore oil production and the majority of offshore oil production will come from here. The ETO model of world energy supply and demand also sees the region becoming the largest producer of on- and offshore gas by mid-century.”
The comments come as Abu Dhabi National Oil Company (Adnoc) and other firms in the region announce plan to increase their spending to boost oil production in 2019 and in the coming years. In the next five years, Adnoc would be spending Dh486 billion to increase production capacity to 4 million barrels per day by 2020 and five million barrels per day by 2030.
The survey also shows that Mena respondents’ optimism over overall prospects for their own organisations in 2019 has risen over the past year, from 78 per cent to 85 per cent, and is second only to China (92 per cent).
As confidence grows, 83 per cent in Mena predict their companies will increase or maintain capital expenditure in 2019, the highest such level of confidence among regions in DNV GL’s analysis.
The survey also shows that more than half (53 per cent) of the region’s senior oil and gas professionals now agree that companies will be able to achieve high profitability in the next decade, well up on the 39 per cent who thought so in 2018. In addition, 89 per cent expect cost control to increase or stay the same this year, compared to 82 per cent last year.
“There is an optimism in the market due to rise in oil prices. Oil and gas industry and Opec need to make sure that oil price doesn’t go up too high or it don’t go too low,” said Oudman speaking to Gulf News over phone.
“The main objective should be to create a price stability of around $60 per barrel environment and that’s what Opec is trying to do and so far it seems to work.”