The oil and gas industry is present in a difficult year, as it must balance financial discipline, the returns of shareholders, and long-term investments in business sustainability-during the movement in a virtual abundance.
the warning It comes from Wood Mackeenzie, who said in a new report that the industry faced conflicting trends during the next year, making the decision -making process difficult. Among these expectations that the market will be activated in increasing supply, which presses prices, while long -term demand for oil demand lights up, stimulating more investments.
“Oil and gas companies have occurred between competing pressure because they plan for 2026.
The CEO added that investors will also affect the decisions, as they continue to give priority for short -term returns for long -term investments. This last part, at least, is not unusual in the current investment environment across industries. However, it can make life more difficult for oil and gas companies for a while.
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The abundance expected by Wood Mackeenzie analysts is the same abundance that the International Energy Agency expects for a while now. However, the same International Energy Agency was issued earlier this month A. warning In the long term security for global oil supplies, saying that the industry needed to increase investment in new production because the natural depletion in mature fields was progressing faster than previously supposed.
According to the report, if the industry is forced to maintain the current levels of oil and gas production, more than 45 million barrels per day of oil and about 2000 billion cubic meters of natural gas in 2050 of the new traditional fields will be needed. It should be noted that this is to maintain current production levels, assuming that the demand will not rise, which is a risky assumption.
Even with increasing projects and approval of new projects for development and not after that, there is still a big gap “must be fill in new traditional oil and gas projects to maintain production at the current levels, although the required amounts can be reduced if there is demand for oil and gas to decline.”
However, the demand can also increase, which increases the degree of uncertainty in the industry and making long-term planning more challenging-especially for companies that have higher levels of debt to property rights. Wood Mackeenzie expects those who number more than 35 % that will give priority to flexibility for long -term growth, while those who have better debt positions will turn into assets disposal and asset acquisitions to improve their wallet quality.
The shares resets will also remain on the oil industry table as a preferred tool to make shareholders happy, although Wood Mac notes that this tends to dehydration when oil slides to less than $ 50 a barrel. It is interesting that the Analysis Company does not seem to be treated in its analysis of a scenario in which prices may rise instead of decline, especially after President Trump indicated that he will be ready for Russian pressure to bring the end of the war in Ukraine.
If prices rise, for any reason, including a huge abundance of 3 million barrels per day that IEA expected to achieve, the immediate expectations for the oil and gas industry become different-but they are not very different. Companies have already proven that they will not return to their old ways to boast when the times were good and tightening belts when the times were bad. They are likely to adhere to caution and return the priority shareholders, regardless of prices.
By Irina Slav for OilPrice.com
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