Global upstream capital spending is likely to grow by 5% this year to
exceed $380 billion, but global spending may require another three years to
return to record 2008 levels, energy consultants Wood Mackenzie said Thursday.
Total upstream spending will recover to around $380 billion in 2010, $19
billion higher than in 2009 but still 10% lower than the historical high of
2008, Wood Mackenzie's regional upstream research manager Iain Brown said in
"It is clear from our understanding of operators' plans in the autumn of
2010, that confidence has returned to many regions and sectors of the
industry, although this effect is far from consistent across the world,"
He said, while confidence has returned to many regions and sectors of
the upstream industry, the revival is set to continue over the next three
years and global spending could recover to 2008 levels by 2012 or 2013.
Brown said, following the financial and economic crisis of late-2008,
many higher cost capital upstream projects were delayed, shelved or
abandoned, and annual spending dropped by over $55 billion.
"Now, just one year on, the industry has proven remarkably resilient.
Many plans have been restored or expanded, in the expectation that demand and
commodity prices will remain relatively robust over the longer-term," Brown
One of the most "spectacular" regions of global upstream spending
recovery is the US where investment in unconventional resources, particularly
shale gas, has supported spending.
As result, total upstream spend will likely return close to peak levels
2008 by 2011, Brown said.
Leading growth areas include the northeastern US--where spending could
exceed $11 billion in 2013, up from around $3 billion in 2009.
Elsewhere, record growth in capital spending is already under way in
Australia, where new project approvals and major gas developments will see
capital expenditure grow threefold by 2013, Wood Mackenzie said.
In Iraq, upstream investment is likely to climb rapidly to $10 billion
in the next three years.
In Canada and Russia, however, spending recovery will be slower as the
regions were more deeply affected by the global crisis, with upstream
spending reduced by around one-third through 2009.
"Both countries have experienced a modest recovery, but current plans
suggest that spending will not return to 2008 levels until towards the end of
the decade," Brown said.
More than half of future upstream investment will come from the
multinational oil majors and a range of prominent national oil companies
such as PetroChina which is pursing an international expansion strategy.
--Robert Perkins, email@example.com
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