June 4 (Reuters) - 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 on Tuesday.
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 conference call.
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 report.
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 said.
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.