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Despite continued economic uncertainty, the outlook for the oil and gas industry has improved since last year and investment intentions have strengthened significantly, according to a new industry survey conducted by the Economist Intelligence Unit (EIU).

"Big Spenders: The Outlook for the Oil and Gas Industry in 2012" is the EIU's second annual industry barometer. The survey asked nearly 200 oil and gas executives for their views about industry trends over the next 12 months.

Commissioned by GL Noble Denton, the study finds that the share of industry executives describing themselves as either highly or somewhat confident about the next 12 months has risen from 76% last year to 82% this year.

In North America 90% of respondents describe themselves as highly or somewhat confident about the next 12 months; in Asia-Pacific the figure falls to 81%; and in Europe it drops to 70%.

The study finds that investment intentions are significantly stronger than last year. Reflecting rising optimism about the future, 63% of executives worldwide say they plan to invest either somewhat more or substantially more over the next 12 months. That number is up from 49% on last year.

Rising operating costs are seen as the key barrier to growth for the second year running. When questioned in detail about costs, more than 50% of respondents say that they expect wages to increase over the next 12 months. The second-biggest concern is the rising cost of contractors, with 54% expecting costs to increase, compared with only 11% anticipating a decline.

Skills are a growing concern, finds the study. Last year, worries about skills came fifth on our list of barriers to growth over the next year and were identified as a top-three growth barrier by only 25% of respondents. This year, the issue has shot up to second on the list, with 34% of respondents identifying it as a top-three issue.

"The high level of industry confidence is striking," notes Chris Webber, Senior Editor at the Economist Intelligence Unit. "Given the slowdown in the growth of demand for both oil and gas during the second half of 2011, we might have expected industry confidence to have taken a knock."

Webber partly attributes the high level of optimism to the anticipated growth in demand for gas, particularly in Asia where the demand for liquefied natural gas has increased significantly.

"Separately, the palpable concern about skills is a clear sign that talent shortages are becoming more acute in the industry," says Webber.

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