June 4 (Reuters) - Oil and gas companies will spend a record$678 billion on exploration and production (E&P) in 2013, 10percent more than last year, Barclays said in a reporton Tuesday.
And in a finding likely to have global ramifications,Barclays expects PetroChina Co Ltd to be the world'slargest E&P spender this year, overtaking Exxon Mobil Corp for the first time since the 1980s.
The Global 2013 E&P Spending Update from the bank offered abullish outlook on the energy industry, with oil demandcontinuing to outstrip supply and oil companies spending more tofind deposits in more remote places.
"We do believe the industry in the early stages of a strong,sustained upcycle," Barclays analyst James West said on aconference call.
Higher spending in the Middle East, as well as solid E&Pbudgets in India, Australia and the rest of Asia, would morethan offset slowing growth in Latin America, Barclays said.
E&P spending outside North America should rise 13.2 percentthis year, a bigger increase than the more than 9 percentBarclays had forecast earlier.
Growth in the Middle East is driven mainly by higherspending forecasts for Saudi Aramco, the world's biggest oilexporter, and increased drilling in Iraq, according to thereport.
Barclays forecast a 2 percent rise in E&P spending in NorthAmerica this year. It had previously estimated flat year-on-yearspending levels for the region.
Strong U.S. land drilling has created a market of "haves"and "have nots" among oil service providers, though spendingshould still rise in the country, Barclays said.
Low natural gas prices in the United States have madedrilling for gas uneconomical in many onshore fields, severelycurtailing drilling activity and weighing on oilfield serviceslike pressure pumping, which is used in hydraulic fracturing.
The relatively slow pace of recovery in the U.S. land marketwas causing continued challenges for smaller companies, whileindustry leaders such as Schlumberger Ltd, HalliburtonCo and Baker Hughes Inc are expected to benefitfrom the demand for premium technology and equipment, Barclayssaid.
Higher budgets from the Chinese majors is driving the growthin the Asia Pacific region, Barclays said.
E&P companies are basing their spending budgets for the yearon oil prices of $101 for Brent, $86.5 for West TexasIntermediate and benchmark U.S. natural gas prices of $3.62, Barclays found in a survey of more than 300 oil andgas companies conducted last month.
Barclays (BARC)
