Manup Industry Roundup - W0823: NEWSL -01
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Annual upstream oil and gas investment needs to rise by 28% to reach $640 billion by 2030 to ensure adequate global supplies, according to a new report published by the International Energy Forum (IEF) and S&P Global Commodity Insight
A cumulative $4.9 trillion will be needed from now until 2030 to meet market needs, even if the growth in oil and gas demand slows down, the report says.
Below are the oil and gas stories and news that made headlines this week carefully curated by Manup.
Summary of the news
GlobalData: Oil & Gas Industry Overall Contract Value Up By 27% QoQ During Q4 2022
The COVID-19 pandemic has had a significant impact on the oil and gas industry, leading to a decline in demand and a drop in oil prices. However, the industry has been recovering since then, with oil prices gradually increasing and demand for energy returning to pre-pandemic levels
Consequently, the overall oil and gas industry contract value saw a significant quarter-on-quarter (QoQ) increase of 27% in Q4 2022
GlobalData’s latest report, "Oil and Gas Industry Contracts Analytics by Sector (Upstream, Midstream, and Downstream), Region, Planned and Awarded Contracts and Top Contractors, Q4 2022,” shows that the overall contract value increased from $47.38 billion in Q3 2022 to $60.36 billion in Q4 2022.
Contract volume, however, decreased from 1,673 in Q3 2022 to 1,443 in Q4 2022.
Pritam Kad, Oil and Gas Analyst at GlobalData, comments: “The key drivers for the value momentum were Saipem’s $4.5 billion contract from Qatargas for the EPC of the North Field Production Sustainability Natural Gas Compression Complex Project, offshore north-east coast of Qatar; and ADNOC’s $4 billion framework with ADNOC Drilling, Schlumberger, and Haliburton for the integrated drilling fluids services (IDFS) for projects in the UAE.”
Operations and maintenance (O&M) represented 55% of the total contracts in Q4 2022, followed by procurement with 19%, and contracts with multiple scopes, such as construction, design and engineering, installation, O&M, and procurement, accounted for 13%.
The other notable contracts include;
• Sembcorp Marine Ltd $3.05 billion contract from Petrobras for the EPC of FPSO- P-82 vessel to be deployed on the Buzios field in the pre-salt Santos basin, Brazil;
• GC Holdings, and Samsung Heavy Industries (SHI) consortium’s contract estimated between $2 - $3 billion from PETRONAS for the EPCC of nearshore FLNG plant with an expected capacity of 2 million tonnes per annum (mtpa) in Sabah, Malaysia.
IEF: $4.9 Trillion Of Oil and Gas Investment Needed By 2030
Up to $4.9 trillion worth of global upstream oil and gas investments will be needed by 2030 to ensure sustained supplies and prevent an energy crisis in the coming years, according to a report by the International Energy Forum and S&P Global Commodity Insights.
The massive investment will be needed “to meet market needs and prevent a supply shortfall, even if demand growth slows towards a plateau”, the report said.
The IEF said that global oil and gas upstream capital expenditure increased by 39% in 2022 to $499 billion, the highest level since 2014 and the largest year-on-year gain in history.
Higher costs primarily drive the increase in investment, and activity has also started to recover. However, drilling remained below pre-pandemic levels as inflation ate away at the spending, according to the report. The number of drilling rigs rose by 22% in 2022, but this was still 10% percent below 2019 levels.
The report claimed annual upstream spending “will need to increase from $499 billion in 2022 to $640 billion in 2030 to ensure adequate supplies”.
“This estimate for 2030 is 18% higher than we assessed a year ago primarily because of rising costs,” the IEF said.
Under-investment in the oil and gas sector “threatens to undermine energy security in the short and medium term”, it added.
Meanwhile, producers can support markets by promoting investment, it says. Operators need a certain level of assurance and fiscal certainty to invest in capital-intensive, long-cycle projects. They will be increasingly constrained in committing capital, or will require higher returns to do so, as risks evolve, the report says.
"Future supply must clear an acceptable hurdle rate that accounts for policy uncertainty, variable oil and gas prices, and, increasingly, carbon price assumptions," the report says.
Additionally, governments should base policies on realistic energy demand outlooks and to ensure adequate and affordable energy supplies during the transition, the report says. "Governments need to ensure assumptions do not underestimate energy demand growth coming from the 80 percent of the global population in the developing world," it says.
U.S. Offshore Rig Count Drops Down A Notch
Baker Hughes’ weekly rig count report has revealed that the number of offshore rigs in the U.S. slipped down one unit last week. The total number of rigs operating in the U.S. also went down to 760 from 761 units during the previous week.
Following the increase in the number of offshore rigs working in the U.S. to 18, Baker Hughes disclosed on Friday, 17 February 2023, that the number of these units fell to 17 last week. In addition, offshore rigs were up by 5 units on a year-over-year basis.
Furthermore, the company points out that the total number of active drilling rigs, including onshore and offshore ones, in the United States decreased by 1 unit to 760 last week, which is up by 115 rigs from last year’s count of 645 with oil rigs going up by 87 units, gas rigs climbing up by 27 units, and miscellaneous rigs rising up by 1 unit.
In comparison to the figures from the week before, oil rigs in the U.S. went down by 2 units to 607 last week while gas rigs went up by 1 unit to 151 and miscellaneous rigs remained unchanged at 2 units.
Moreover, the total number of active rigs in Canada slipped down by 2 units last week to 248 rigs compared to the previous week with oil rigs up by 2 to 163 units while gas rigs were down 4 units to 85.
According to Baker Hughes’ report, the total number of rigs in Canada rose by 28 units from last year’s count of 220 rigs. While oil rigs increased by 28 units last week compared to the year before, gas rigs kept the status quo.
Key Ways To Amplify The Development Of Africa’s Gas Markets
Africa is home to 620 trillion cubic feet of gas reserves which present an opportunity for the continent to provide energy access to its over 600 million people living without access to energy and 900 million without access to clean cooking solutions.
As such, African countries are already implementing various mechanisms aimed at boosting the development, exploitation and monetization of gas resources to drive the continent’s energy sector stability and economic growth.
A new report released by the International Gas Union (IGU) highlights the key principles that Africa needs to adopt to supercharge the development of gas markets.
Read report here
GETI Report: Oil And Gas Sector First Choice For Energy Workers
The seventh annual Global Energy Talent Index (GETI), has revealed that the recent gas price crisis has transformed oil and gas into the most popular sector for energy workers looking to change roles and has sent salaries soaring above pre-pandemic levels.
The report by Airswift, finds that, with oil and gas majors posting record profits, 44% of oil and gas workers saw their pay increase last year and two-thirds expect further salary rises next year. 41% expect bumper pay rises of over 5% next year..
Sector-wide salaries are being inflated by fierce competition for oil and gas talent, with almost one-in-three oil and gas workers having been headhunted over six times in the past year. Big pay packets are also driving high job satisfaction, with remuneration cited as the biggest driver of said satisfaction and 69% of oil and gas workers declaring themselves satisfied in their current positions..
Yet rising salaries and job opportunities are also empowering oil and gas workers to seek jobs based on values as well as salaries, with ESG concerns now among their top three reasons for choosing employers.
Renewables is the first choice of outside energy sector for oil and gas workers to join, perhaps due to its pivotal role in the environment.
The report also found that;
• The revival of oil and gas projects from France to the UK makes Europe the leading destination for oil and gas workers seeking overseas transfers (27%). The Middle East has supplanted North America as the second choice destination, as workers are drawn by the lure of low taxes and booming Middle Eastern infrastructure development.
• The proportion of workers wanting to relocate has fallen from 91% in 2020 to 81% as of now
• Of those companies that have begun transitioning to clean energy, 38% welcome the change this has made to their roles.
Read full report here
Other stories we are following…