Analysts: More Spending Needed To Meet Future Oil, Gas Demand
Wood Mackenzie says upstream oil and gas companies must invest 20% more to meet the world’s future energy needs. Annual development spending needs to rise to about $600 billion through the next decade.
That could prove a difficult task for some holding onto cash with not-too-distant memories of plunging oil prices, shelved projects, massive layoffs and other cuts. Additionally, companies are facing pressure today to use excess cash flow—thanks to improved market conditions and efficiency—for other purposes, including returning it to shareholders.
“Four years of deep capital rationing have had a severe impact on resource renewal, especially in the conventional sector,” Tom Ellacott, senior vice president of corporate research for Wood Mackenzie, said in a news release.
The firm pointed out that spend is rebounding post downturn but said sustainability is an issue.