- Autor: Astrid Folkvord Janbu
- Keywords: Oil & Gas
Regional Communications Manager, Region South East Asia & Australia, DNV GL - Oil & GasTelefon: +65 9658 8512
Astrid Folkvord Janbu
Astrid Folkvord Janbu
Head of Media Relations, DNV GL – Oil & GasTelefon: +47 478 45 860
VP Director of Communications, DNV GL - Oil & GasTelefon: +47 415 60 264
Short-term agility, long-term resilience is DNV GL’s seventh annual benchmark study on the outlook for the oil and gas industry, providing a snapshot of industry confidence, priorities and concerns for the year ahead. It draws on a survey of 723 senior sector players 1 .
“The number of companies we now see pursuing opportunities beyond oil and gas signals a step change in the reshaping of the sector and demonstrates the sector's ability to adapt and build a more robust, diverse and sustainable future in which gas will have a key role to play,” says Richard Palmer, Country Manager, DNV GL – Oil & Gas Australia.
Despite the high share engaging in diversification strategies, investments across the oil and gas value chain will continue in 2017 at a similar level, with the percentage of respondents expecting to maintain or increase CAPEX levelling at 39% (same as globally), slightly up from 36% last year. More than half (55%) will favour investment in more agile projects that are adaptable in shorter time frames.
Australians are also more confident than their global peers that the worst of the downturn is over (45% vs 27%). Confidence in the oil and gas sector has risen from 19% to 30% in the last year, but Australian respondents are less confident about the overall prospects for their own organization – with a decline from 48% to 38%.
Cost-cutting in 2017 will be prioritized around OPEX (41%), workforce reduction (34%) and organizational restructuring (34%), with less focus on CAPEX reductions - down from 37% to 27% in the last year. Notably and alarmingly, 30% of respondents believe that cost-cutting is negatively affecting the health and safety risk (compared to only 19% globally).
Over half (52%) say that the cost pressures are driving more industry collaboration, a positive effect of recent market challenges. Efforts to improve standardization are also increasing as this helps remove remaining complexities. Sixty-one per cent of respondents say their organization will seek greater standardization of tools and processes in 2017, a 16% increase from 2016.
Digitalization is also increasingly seen as a means to enhance operational and cost efficiencies. Thirty-three per cent of respondents believe there has been an increased focus on digitalization since the beginning of the downturn in June 2014. Almost half (45%) of respondents also said their organization will embrace digitalization to increase profitability.
"We see a mixed picture for the oil and gas sector in Australia. The majority believe the worst of the downturn is over, confidence in the overall outlook for the industry has improved slightly and nearly half expect oil prices to rebound in 2017. However, more than half expect further job losses this year and it is of great concern that nearly one in three believe cost-cutting is reducing HSE levels,” adds Richard Palmer. “While the oil and gas industry continues to experience one of the lowest injury and fatality rates of any industry in Australia, this is clearly an area to watch. We as a sector should never compromise on safety.”
“Last year, we saw intense and painful short-term cost-cutting measures in the industry,” comments Elisabeth Tørstad, CEO, DNV GL – Oil & Gas. "Though cost-cutting measures are still on the table this year, confidence in oil and gas sector growth has stabilized for now and opportunities are being created. An improved focus on collaboration, standardization and digitalization will enable the industry to transform to meet the demands of the new era and become profitable in volatile markets.”
Other key findings include:
- When asked to predict the price of oil at the end of 2017, Australian respondents forecast an average of USD63.0 per barrel, significantly higher than the global average of USD57.8 per barrel, and the average from Asia Pacific respondents with of USD60.0 per barrel.
- 24% are actively looking for new merger and acquisition opportunities in gas as a result of falling oil prices.
- Cost management has fallen as a top priority, from 34% to 24%. 69% believe they have been successful in achieving cost-efficiency targets.
- 52% expect increased strictness on cost control, but this is down from last year (67%).
- The biggest barriers to growth are uneconomic oil prices (64%) and the weak global economy (36%), followed by uneconomic gas prices (27%) which is down from the previous year (36%).
- A growing portion expect operators to increasingly push to standardize their delivery globally, up from 53% to 64%.
- 59% say cost pressures are driving collaboration to make new projects financially viable.
- A third (33%) believe there has been an increased focus on digitalization since the beginning of the downturn and 18% expect to conduct R&D in digitalization.
1. The outlook for the oil and gas industry in 2017 is an industry benchmark study from DNV GL, the leading technical advisor to the industry. Now in its seventh year, the programme builds on the findings of six prior annual outlook reports, first launched in early 2011. During October and November 2016, we surveyed 723 senior professionals and executives across the global oil and gas industry, along with 14 in-depth interviews with a range of experts, business leaders and analysts. Two–thirds (66%) are employed by suppliers and service companies across the industry, while 26% of respondents work for oil and gas operators. The remaining respondents come from regulators and trade associations. The companies surveyed vary in size: 41% had annual revenue of USD500m or less, while 18% had annual revenue in excess of USD5bn. Respondents were drawn from right across the oil and gas value chain, including publicly-listed companies and privately-held firms. They also represent a range of functions within the industry, from board-level executives to senior engineers.