Despite fears of tougher regulation following incidents such as the Deepwater Horizon spill in the Gulf of Mexico, the global oil and gas industry is optimistic of an upturn in business in 2011, a new report reveals. The Economist Intelligence Unit study also makes clear that price volatility has failed to dent the industry's appetite for investment in new exploration and market opportunities.
Senior industry executives surveyed and interviewed see considerable investment opportunities during a period of relative price stability, especially in the fast-growth economies in Asia.
Nearly one-third of executives surveyed see Southeast Asia as offering the greatest opportunities over the coming year, with that proportion rising to 58% when combined with China and the Far East. North America is the next significant region of opportunity, cited by 30% of respondents.
Natural gas has gained widespread credibility as a relatively low-carbon “transition fuel”, especially for electricity generation. Global demand for liquefied natural gas (LNG) has grown as countries in Asia and Europe have sought to increase their supply options. And the emergence of large reserves of “unconventional” gas in North America offers oil and gas companies the chance to replace declining production. However, both the recession and the sense of abundant supply have depressed natural gas prices.
"The inaugural oil and gas barometer takes the pulse of senior executives at a challenging time for the industry," says Tony McAuley, managing editor, energy, at the Economist Intelligence Unit. "New risks are emerging, and 'black swan' events like the Gulf disaster have shown that the operating environment and the perception of risk can change seemingly overnight.
"But our survey shows that there is room for optimism too. Companies are prepared to invest for the future, and meet new safety and environmental standards. There is an appreciation that the industry must do its bit to reform, yet there is equally a clear message that policymakers must not allow knee-jerk reactions to influence regulations."
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