By Elsa Baxter
Report says total spending of listed oil and gas firms to exceed $798bn.
Oil and gas sector spending is forecast to grow by 12 percent this year, driven by large national oil companies, according to the latest research.
Total capital expenditure of leading listed oil and gas companies is expected to exceed $798bn, a report by GlobalData released on Thursday said.
Meanwhile, capital expenditure of listed NOCs is predicted to increase by 16 percent to around $375bn in 2010.
One of the greatest challenges faced by oil and gas companies this year is making the right investment decisions, the report said.
“The global refining industry is witnessing a slump following the global economic downturn after a high return period in the past few years.
“Uncertain product demand, decreased refinery margins and surplus refining capacity are having a combined negative effect on the profitability of refining operations.
“This will continue to cast a shadow of uncertainty over the future of refinery margins thereby compelling integrated companies to divest their non-profitable assets to fund other businesses,” the report said.
GlobalData said global oil and gas spending last year would be down 18 percent compared to 2008 when it rose by 26 percent on the previous year.
“The capital expenditure plans for 2009 are noticeably different in terms of the scope and strategy adopted by the large companies,” the report said.
“Even the ambitious investment plans are accompanied with cost cutting measures.”
However, with major economies showing some signs of recovery in the second half of 2009, global economic conditions are expected to improve this year, with India and China leading the resurgence, the report said.