This report reflects what customers worldwide are telling us about the outlook for the year ahead. The global oil and gas industry is entering 2019 with renewed optimism and a greater sense of resilience. Despite greater oil price volatility in recent months, our research shows that the sector appears confident in its ability to better cope with market instability and long-term lower oil and gas prices. Confidence has surged from 32% in 2017 to 76%.
Greater investment is expected to fuel oil and gas industry growth in 2019: two thirds of the senior sector players that we surveyed expect a rise in large, capital-intensive oil and gas projects this year. Most (70%) foresee increased or maintained capital expenditure: 65% predict greater or stable operational spending.
Recruitment is now firmly back on the agenda after four years of consistent reductions. A third of respondents expect to grow their workforce in 2019, compared to 10% four years ago.
While increasing optimism and expectations for higher spending are to be welcomed, there will also be new challenges for our sector this year. The industry’s resolve to maintain efficiencies and cost discipline will be tested. A fifth of our respondents view cost efficiency as a ‘top priority’ for 2019, compared to 41% in 2016. Pressure is building in the supply chain and more contracts are exposed to cost inflation. Skills shortages are re-emerging as a key barrier to industry growth as a rise in service outsourcing looms. In pursuit of long-term efficiency, digitalization leads R&D spending priorities, with the top areas for digital investment relating to data sharing, integration and access.
Most (51%) respondents now see their company actively adapting in 2019 to a less carbon-intensive energy mix. They are more likely to do so because of regulation rather than through choice. More than a third (36%) will increase investment in gas this year, and 28% expect greater use of hydrogen for decarbonizing gas supply. Our survey also explores the dynamics of carbon capture and storage. The message for policy makers is that short-term incentives could accelerate long-term decarbonization.
Not long ago, the industry regarded the energy transition as a transformation on the horizon however, it has become clear that this significant change is already upon us.
I wish you a successful 2019 and hope this year’s report provides you with foresight, as it does us, to chart a sustainable path in the years ahead.