June 4 Oil and gas companies will spend a record
$678 billion on exploration and production (E&P) in 2013, 10
percent more than last year, Barclays said in a report
And in a finding likely to have global ramifications,
Barclays expects PetroChina Co Ltd to be the world's
largest E&P spender this year, overtaking Exxon Mobil Corp
for the first time since the 1980s.
The Global 2013 E&P Spending Update from the bank offered a
bullish outlook on the energy industry, with oil demand
continuing to outstrip supply and oil companies spending more to
find deposits in more remote places.
"We do believe the industry in the early stages of a strong,
sustained upcycle," Barclays analyst James West said on a
Higher spending in the Middle East, as well as solid E&P
budgets in India, Australia and the rest of Asia, would more
than offset slowing growth in Latin America, Barclays said.
E&P spending outside North America should rise 13.2 percent
this year, a bigger increase than the more than 9 percent
Barclays had forecast earlier.
Growth in the Middle East is driven mainly by higher
spending forecasts for Saudi Aramco, the world's biggest oil
exporter, and increased drilling in Iraq, according to the
Barclays forecast a 2 percent rise in E&P spending in North
America this year. It had previously estimated flat year-on-year
spending levels for the region.
Strong U.S. land drilling has created a market of "haves"
and "have nots" among oil service providers, though spending
should still rise in the country, Barclays said.
Low natural gas prices in the United States have made
drilling for gas uneconomical in many onshore fields, severely
curtailing drilling activity and weighing on oilfield services
like pressure pumping, which is used in hydraulic fracturing.
The relatively slow pace of recovery in the U.S. land market
was causing continued challenges for smaller companies, while
industry leaders such as Schlumberger Ltd, Halliburton
Co and Baker Hughes Inc are expected to benefit
from the demand for premium technology and equipment, Barclays
Higher budgets from the Chinese majors is driving the growth
in the Asia Pacific region, Barclays said.
E&P companies are basing their spending budgets for the year
on oil prices of $101 for Brent, $86.5 for West Texas
Intermediate and benchmark U.S. natural gas prices
of $3.62, Barclays found in a survey of more than 300 oil and
gas companies conducted last month.