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Oil and gas executives expect to boost spending this year-survey

Mon, 21st Jan 2019 23:01

* Survey shows 70 pct of firms to lift hike spending in 2019

* More large energy projects could be approved - survey

* More firms to focus on lower-carbon energy sources

By Nina Chestney

LONDON, Jan 21 (Reuters) - The majority of senior energyindustry executives expect to maintain or increase spending thisyear to meet demand for oil and gas after years of austerity, asurvey by DNV GL shows.

DNV, a technical adviser to the energy industry, surveyed791 senior professionals from firms with annual revenue rangingfrom $500 million or less to those earning $5 billion and more.

BP, Shell and many other companies cutcapital spending and costs in 2016 after the price of benchmarkBrent crude fell to a 12-year low of below $30 a barrel.

Helped by output cuts by Organization of the PetroleumExporting Countries and its allies, Brent climbed to an averageprice of $70 last year compared to $50 for the period 2015 to2017. It was trading above $62 a barrel on Monday.

DNV's annual outlook of the global oil and gas industryshowed 70 percent of respondents planned to maintain or increasecapital spending in 2019, compared to 39 percent in 2017.

Those expecting to sustain or increase operating expenditurealso grew to 65 percent in 2019 from 41 percent in 2017.

In addition, 67 percent believed more large,capital-intensive oil and gas projects would be approved thisyear.

"Despite greater oil price volatility in recent months, ourresearch shows that the sector appears confident in its abilityto better cope with market instability and long-term lower oiland gas prices," said Liv Hovem, who heads DNV's oil and gasdivision.

"For the most part, industry leaders now appear to bepositive that growth can be achieved after several difficultyears," she added.

The survey indicated that the industry's focus on costcontrol was easing, with 21 percent of respondents saying costefficiency would be a top priority in 2019, down from 31 percentin 2018 and 41 percent in 2016.

The survey also indicated that more energy companies werepreparing for a long-term shift to cleaner energy sources.

More than half of respondents, or 51 percent, said theywould focus on adapting to a less carbon-intensive energy mix in2019, up from 44 percent last year, due to stricter regulation.

One third said they aimed to increase investment inrenewable energy in 2019, and 35 percent said their firms wouldlift investment in gas-related projects and portfolios.

Despite growing momentum among energy firms to reduce theircarbon footprint, DNV said its survey indicated "that companiestoday are more likely to be doing so because they are told to,rather than because they want to."

The report said 46 percent of respondents believed high oilprices could delay the industry's shift towards decarbonisation,as firms sought to make short-term gains from more efficientpractices and improved margins.

(Reporting by Nina ChestneyEditing by Edmund Blair)

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