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


Popular posts from this blog

PIAC told to go to court to enforce recommendations

By: Fred Yaw Sarpong

The Public Interest and Accountability Committee (PIAC), the mandated body to monitor the use of Ghana’s oil revenues has been asked to go to court to seek strict compliance of the laws covering accountability of oil funds in the country.

According to Dr. Steve Manteaw, the Campaign Coordinator for ISODEC and a member of the PIAC , it’s time for PIAC as a body to consider going to court to compel institutions responsible for managing Ghana’s oil revenue to answers some questions concerning the expenditure of oil funds.

He pointed out that there are several recommendations made by the PIAC in its past reports on management of petroleum revenues, and a lot of these recommendations has received no positive response from the institutions concerned.

He disclosed this to the Daily Express at a three-day workshop on Interrogating the 2016 Semi Annual PIAC Report at Koforidua in the Eastern Region.

The workshop was organized by the Institute of Financ…

BoG shuts down two financial institutions

The Bank of Ghana has closed down two financial institutions in the country. This was after the central bank investigation revealed that the two companies were operating without approval.

The two companies were Agro Development Fund Services Limited (ADFSL) and Hebron Financial Investment Limited (HFIL).

The Daily Express gathered that the ADFSL was asked to stop operating after the central bank realized the institution had not been licensed to take deposit from the public.

A statement from BoG said the ADFSL continued to operate despite the orders from the Bank of Ghana. It however closed down ADFSL’s operation until further notice.

The Bank of Ghana said that the ADFSL is located at Asufufu, opposite the Sunyani Traditional Council in the Brong Ahafo region.

“The decision to close down ADFSL is in furtherance of section 20(2) (g) of the Banks and Specialized Deposit-Taking Institutions Act, 2016 (Act 930). Bank of Ghana has investigated ADFSL thoroughly and has concluded that its a…

Graphic Communication Group staffs petition GJA Election Dispute Adjudication Committee

Some staffs of the Graphic Communications Group have petition the Election Dispute Adjudication Committee of the Ghana Journalists Association (GJA) concerning their grievances covering issues affecting the association.
The staffs of the company seeks some clarification on the mandate of the current executives of the association.

Dear Sir,
We the undersigned write to place before you our grievances covering issues affecting the Ghana Journalist Association, and we hasten to add that our grievances are placed before you in furtherance of our constitutional duty under Article 11 (e) of the 2004 Constitution of the Ghana Journalists Association.
We first of all seek clarification on the mandate of the current executives of the Association to be in office and take decisions to affect the wellbeing and welfare of the Associ…