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Thu 11 Nov 2010 03:17 PM

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Oil company 2010 spending to hit $380bn, consultant says

Global upstream investment to rise about 5.3% from last year - Wood Mackenzie

Oil company 2010 spending to hit $380bn, consultant says
O&G SPEND: Global upstream investment will rise about 5.3 percent, or by $19bn, from last year, Edinburgh-based Wood Mackenzie said (Getty Images)

Oil and
natural gas companies are expected to raise investment in production projects
to more than $380bn this year, partly driven by spending on drilling for
shale gas in the US, consultant Wood Mackenzie said.

Global
upstream investment will rise about 5.3 percent, or by $19bn, from last year,
Edinburgh-based Wood Mackenzie said on Thursday in a report. The spending will
be about 10 percent below a historical high in 2008, according to the report.

“The
most spectacular recovery has been in the US, where total spend should return
close to peak levels by 2011,” the consultant said. “This is primarily due to
restored confidence and an impressive renewal of activity in unconventional
resources, particularly shale gas.”

Exxon
Mobil Corp, BP, Royal Dutch Shell and other oil explorers have expanded
unconventional oil and gas projects in the US and added expertise in shale production,
which involves drilling horizontally for thousands of feet, then fracturing
rock with injections of water, sand and chemicals.

Chevron
Corp, the second-largest U.S. oil company, this week agreed to buy Atlas
Energy for $3.2 billion, giving it access to the Marcellus Shale formation
in Pennsylvania.

“Record
growth in capital spending is already under way in Australia, where new project
approvals and major gas developments will see capital expenditure grow
three-fold by 2013,” Wood Mackenzie said. “In Iraq, upstream investment is
likely to climb rapidly to $10bn in the next three years.”

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