Skip to main content

Oil and gas outlook remains positive

Robust oil prices and major upcoming projects would boost the global oil and gas sector earnings by five to six per cent in 2015.

However, the sector faces increasing capital intensity and execution risks as it shifts from traditional to more costly and complex oil and gas resources, says Moody's Investors Service in a report on Thursday.

The report, titled: "Global Integrated Oil and Gas Industry: Crude Prices Bolster Oil Majors with New Production Capacity Coming On-stream," said although oil prices had recently retreated, it was still expected to remain relatively strong.

“…a string of major projects are due to come on stream and ramp up in 2015-16, which will deliver volume and cash flow growth,” Thomas Coleman, Moody's Senior Vice President, said.

"However, companies still face production growth challenges because of the sheer volume that companies must replace and the shift to resource developments in harder to drill areas," he said.

The industry's shift to more costly and complex developments like deepwater and pre-salt projects, heavy oil and synthetic crudes, large integrated liquefied natural gas projects and unconventional shale, reflects the companies’ exclusion from many of the most attractive oil provinces.

Sector operating and capital costs have also increased dramatically over the past few years, pressuring capital returns, despite fairly robust upstream profits and relatively stable unit cash margins.

Rising unit costs reflect increasing project complexity, longer cycle times and higher maintenance and safety requirements, as well as sector inflation in the face of rising oil prices and labour and equipment shortages.

However, with the completion of numerous large upstream projects, the capital spending cycle is turning.

Consequently, the trend in sector negative free cash flows and rising debt levels should moderate from 2015 through late 2016.

The report said many of the leading integrated companies were taking a pause from long-cycle investments to focus on more capital efficiency and shareholder rewards.

This could slow down sector growth even if investor returns ultimately improved, it said.

Integrated oil companies also face heightened political risk, with major regional conflicts ongoing in the Middle East and in Ukraine.

However, the integrated companies generally have scale and good geographic diversification to help offset the political risk. As a result, Moody's sees the conflicts primarily affecting long-term growth opportunities rather than near-term cash flow and production, said the report.


Credit: GNA

Comments

Popular posts from this blog

PFM Act to guide local government authority borrowing

By: Fred Yaw Sarpong
The bill, Public Financial Management (PFM) Act 921 which has been passed into law by Parliament is to guide public institutions especially the local government authority borrowing. The law was pass on 3rdAugust, 2016
According to the law, local government authority, a public corporation or state-owned enterprise is liable for the debt and other obligations without recourse to Government, unless otherwise explicitly guaranteed by Government in accordance with this Act.
Madam Eva Esselba Mends, the Chief Economic Officer and Group Head of PFM at the Ministry of Finance told the Daily Express that the law involves a lot but it also give instruction to how state institutions can borrow especially with the  local government authority.
She mentioned that there is no specific law in place that gives direction as to what local authority can do when it comes to borrowing by the authority. Other public corporations sometimes borrow with huge amount for their operation but loca…

Tigo donates 540 tablet phones Death and Birth Registry

By: Sarpongs.blogspot.com 
Tigo Ghana has presented 540 tablets phones with internet connectivity to the Births and Deaths Registry (BDR) for the pilot phase of the automated birth registration programme.
This form parts of Tigo’s strategic focus to accelerate birth registration in Ghana through mobile technology. Tigo in partnership with UNICEF is providing this technology platform.
A statement from Tigo stated that the tablets will allow birth registration attendants from the Births and Deaths Registry to electronically capture details of all new births in 300 communities across Ghana.
The automated birth registration programme which was launched in May this year, is expected to make a significant contribution to an improved national average registration rate, an increase from 65 percent of all children under age one to at least 75 percent by the end of 2017.
According to Tigo, a successful pilot will also contribute to progress under Ghana’s National Civil Registration and Vital Statist…

Vodafone fined a record £4.6 million for IT blunder

A top-up error left pay-as-you-go customers out of pocket and complaints were mishandled
Vodafone has been fined a record £4.6 million by the telecoms watchdog forleaving thousands of customers out of pocket in a disastrous IT blunder.
Ofcom found that the operator mishandled complaints and failed to pay into the accounts of more than 10,000 pay-as-you-go customers when they topped up their credit.
The top-up error, which cost customers £150,000 over 17 months in 2014 and 2015, stemmed from the moving of 28.5 million accounts to a new billing system.Errors in billing data and price plans caused so much protest that it made Vodafone the most complained-about mobile network in Britain.The technical issues were resolved by April 2015 and all accounts are now on the new system, Vodafone said.
Lindsey Fussell, Ofcom’s consumer group director, said:“Vodafone’s failings were serious and unacceptable, and these fines send a clear warning to all telecoms companies.”
The company says that it has ref…