Confidence is returning to the oil and gas industry, with a majority of respondents in a DNV GL survey saying that they plan to increase capital expenditure this year. The Norway-based energy industry advisory firm noted that while last year confidence in the growth prospects for oil and gas firms had stood at 32 percent of respondents, now it has gone up to 63 percent.
DNV polled 813 senior oil and gas executives, of which 36 percent said their companies would spend more on R&D and innovation this year. That’s the highest portion in the last four years, the consultancy noted.
Within R&D, energy companies will focus on digitization and cybersecurity—two areas that undoubtedly need urgent attention, especially since 22 percent of respondents placed competitive pressure at the top of the list that makes up the biggest barriers to growth this year. Next are reduced exploration and oil and gas oversupply, each with 19 percent, and operating costs, which 18 percent of respondents believe will be the main obstacle to growth.
Still, financial discipline seems to be the mainstay despite the challenges, or perhaps because of them. “A new optimism is now emerging, driven from a common understanding that cost levels are under control and operators can make reasonable margins from an oil price that is expected to stay lower for much longer. The winners in our industry this year are those who can continue to make a clear shift from an expansion mindset to a margin mindset, and recognize the importance of implementing new models and technologies to improve operational efficiency,” said the CEO of DNV Oil and Gas, Liv Hovem.
Half of the survey respondents said they will continue to tighten their cost controls this year, and almost two-thirds shared a belief that this new financial discipline is now a permanent facet of the industry. This, DNV notes, suggests that oil and gas is undergoing a sustainable change.