(Adds Iraq details)
June 18 (Reuters) - Oil and gas companies will increaseexploration and production (E&P) spending by 6 percent to $712billion this year, despite a slight pullback in spending byindustry majors, Barclays said.
Spending by major oil companies is expected to remain flatthis year, Barclays said in a report on Wednesday. The bankearlier said it had expected spending to rise by nearly 3percent.
The big oil companies, Exxon Mobil Corp, ChevronCorp, Royal Dutch Shell Plc, Total SA and BP Plc, are under pressure from investors to keep atight lid on spending after years of record spending on majorprojects.
Barclays said it expected smaller, independent oil and gascompanies to drive spending growth in North America, wherecapital budgets were expected to rise 8.4 percent this year,higher than the 7.3 percent it forecast earlier.
There is potential for higher capital deployment in theUnited States due to geopolitical risks in other oil-producingcountries, particularly Iraq, Barclays said.
"I think the first place they are going to put that money into is North America," Barclays analyst James West toldreporters on a conference call.
If conditions in Iraq deteriorate further large Western oilcompanies like Exxon Mobil Corp may contemplatereallocating dollars to more stable regions like the UnitedStates, he said.
Some oil companies are pulling staff from Iraq, fearingviolence could spread to major oilfields concentrated in thesouth as Sunni militants push forward in northern Iraq.
Worries about oil exports from the key producer pushed upthe price of Brent crude to $114 a barrel on Wednesdaywhile West Texas Intermediate traded in New York was downslightly at $106 a barrel.
The higher oil prices are expected to boost cash flow forindependent exploration and production companies, a factor thatmay push North American spending even higher, said Barclaysanalyst James West.
The bank's report, titled "Global 2014 E&P Spending Update,"is based on a survey of more than 300 oil and gas companies lastmonth. (http://bit.ly/T6Ge6C)
Barclays said it also expected higher spending in Africaand Asia this year, but lower capital budgets in Europe andLatin America would limit the overall increase.
E&P companies are basing their spending budgets for the yearon oil prices at $101 per barrel for Brent and $91 per barrelfor West Texas Intermediate, and a benchmark U.S. natural gasprice of $4.12 per British thermal unit, well below currentprices, Barclays said. (Reporting by Swetha Gopinath in Bangalore and Anna Driver inHouston; Editing by Kirti Pandey and Sofina Mirza-Reid)
