New research reveals the industry’s outlook for 2013The global oil and gas industry remains confident for significant growth in 2013, despite concerns over a mounting shortage of skilled professionals and wider economic uncertainty, according to research findings released today by GL Noble Denton.
Seismic Shifts: The outlook for the oil and gas industry in 2013, is an annual litmus test for industry sentiment in the year ahead. It has been produced with input from a survey of more than 400 oil and gas professionals, and in-depth interviews with 20 industry executives.
Headline findings for 2013:
- Nine in ten respondents remain confident for the outlook for oil and gas industry this year
- Skills shortages have risen sharply to become the number one barrier to sector growth
- M&A-fuelled expansion is expected to show a year-on-year fall
- Oil prices are expected to remain stable throughout the year
- An upsurge in US projects has made the country the most desirable international oil and gas investment destination, followed closely by Brazil and Australia
- Concerns over the euro zone may cause economic uncertainty to affect the sector in 2013.
Pekka Paasivaara, Executive Board Member, GL Group said: “The industry is in a positive mood according to our research. This is underpinned by the potential for exceptional growth in projects across the US, Brazil and Australia, and signs of a power shift in global energy distribution.
“Trends indicate that 2013 could be the year in which we see the beginning of an east-west divide in supply and demand. The US will increasingly fuel its own energy needs, relying less on the Middle East for imports. In turn, the Middle East may be able to refocus supply toward growing energy demands in Asia.”
89% of those questioned stated that they were confident for the industry as a whole, an increase from 82% in 2012. This buoyancy translates to expectations of rising capital expenditure by the global oil and gas industry this year, according to over half of respondents (51%).
The research does suggest, however, that a significant proportion of any predicted rise in spending will be attributed to securing and retaining talent from a dwindling pool of resources. An industry-wide deficit of skilled oil and gas professionals is now seen as the number one barrier to this broadly positive outlook on global growth, up from the second biggest barrier in 2012 and fifth biggest in 2011.
It is likely that technology will increasingly be called upon to plug this skills gap. 37% of those surveyed believe research and development (R&D) spend will increase, while just 6% expect it to fall in 2013. One likely consequence of this will be greater co-operation between international oil companies (IOCs) and national oil companies (NOCs) according to the research, as the former is called upon to provide the technologies desperately required to access reserves held by the latter.
Despite the continued emergence of shale gas extraction and concerns over a broader global gas ‘glut’, any further worldwide decoupling of oil and prices remains unlikely, with less than half (44%) of respondents believing gas prices will continue to deviate from the oil index. According to the research, oil and gas professionals expect oil prices to remain high in 2013, at around US$100 per barrel.
A degree of stability is also expected in oil and gas companies’ growth strategies. 41% of respondents suggest that organic growth will fuel business expansion this year. Just 14% of respondents expected M&A to provide the majority of their expected growth, representing a major decrease on the 35% who expected this in 2012.
As industry growth continues, the US leads the way for countries highlighted as most favourable for global investment in 2013. Australia and Brazil follow closely, according to the research. Australia has benefited from high capital expenditure mega projects, whilst Brazil has a number of lucrative ventures coming online in 2013. In contrast, Asian countries have slid down the list of preferred investment destinations, suggesting that broader concerns remain about spending potential in the region.
Mr Paasivaarasaid: “Seismic Shifts clearly reveals that US, Brazilian and Australian growth is likely to drive the oil industry over the coming year, but skills shortages remain very much front of mind, despite robust confidence levels. As advancing technologies continue to offer renewed opportunities for operators in a variety of locations worldwide, the race is on to secure the best talent from a global pool that is widely considered to be declining.
“These shortages will most acutely affect mature markets such as Europe and the US, although the findings of our research suggest that there is potential for an influx of younger specialists from Asia in the long term, where the uptake of engineering as a career path is significantly higher.
“The conflicting pressures of talent management, increasingly complex hydrocarbon recovery operations and R&D spend are all likely to drive up overall capital expenditure this year. Companies will have to think smarter to achieve the levels of safety, integrity and performance that will be required to breed success in 2013.”
About GL Noble Denton
GL Noble Denton, part of the GL Group, is a global independent technical advisor to the oil and gas industry. With a presence in over 80 countries, the company applies global best practice in safety, integrity and performance across the lifecycle of its clients’ on- and offshore operations.
About the research
Seismic Shifts: The Outlook for the Oil and Gas Industry in 2013is the third in a series of annual industry benchmarks commissioned by GL Noble Denton. 428 senior professionals and executives across the global oil and gas sector were surveyed by GL Noble Denton during November and December 2012, and the research was conducted in association with Longitude Research.
63% of respondents operate in both oil and gas, while the rest focus primarily on either oil or gas. The companies surveyed spanned a range of sizes: 28% had annual revenues of US$500m or less, while 19% had revenues in excess of US$10bn. Most respondents’ companies (46%) are publicly listed, with the rest either privately-held (36%), state-owned (12%) or operating as a joint venture.
Respondents represent a range of functions within the industry, with nearly four in ten (37%) at a director level or higher.
The findings and views expressed within the report do not necessarily reflect the views of GL Noble Denton.