After three tough years, confidence in oil and gas industry growth has risen globally from 32% in 2017 to 63% this year, while two thirds (66%) of respondents say their company will maintain or increase capital spending in 2018, compared to 39% last year.
The latest annual oil and gas industry outlook from DNV GL also reveals an imminent turnaround in spending on R&D and innovation after three years of cuts and freezes.
- Just 37% of senior industry professionals named the oil price as an expected barrier to growth for 2018, compared to 64% one year ago, while:
- Nearly two-thirds (62%) of respondents expect their organization to maintain or increase headcount in 2018, compared to 43% in 2017 – 58% of respondents expect to maintain or increase operating expenditure in 2018, up from 41% last year
More than a third (36%) of 813 senior sector players surveyed, expect to increase spending on R&D and innovation in 2018: the highest level recorded in four years. Digitalization (37%) and cyber security (36%) will form the principal areas of R&D investment focus this year.
Nearly one in five respondents (19%) cite lack of investment in innovation as a key barrier to growth in 2018 – on a par with oversupply of oil and gas (19%), operating costs (18%), reduced exploration activity (19%) and competitive pressure (22%).
Liv Hovem, chief executive, DNV GL Oil & Gas, commented: “Our research indicates that the oil and gas industry is becoming more confident that its successful focus on cutting costs and building new efficiencies into the value chain will last.
“A new optimism is now emerging, driven from a common understanding that cost levels are under control and operators can make reasonable margins from an oil price that is expected to stay lower for much longer.
“The winners in our industry this year are those who can continue to make a clear shift from an expansion mindset to a margin mindset, and recognise the importance of implementing new models and technologies to improve operational efficiency.
“Intentions to increase capital and innovation spending in 2018 come alongside a clear signal that oil and gas industry costs will not return to pre-2014 norms.”
9 Feb 2018