Key themes for the global oil Gas industry in 2022

According to the US Drilling website, Analysts at Fitch Solutions Country Risk&Industry Research have revealed their key themes for the global oil gas industry in 2022 in a new report sent to Rigzone.

One such theme is the forecast that the oil market will shift undersupplied to oversupplied in the first half of next year. Fitch Solutions analysts believe this change will lead to lower oil prices could lead to a divergence in production between Opec + non-OPEC members.

"Despite the emergence of the Omicron strain at the end of the year, Opec + has confirmed that they will continue to increase production by 400,000 b/d per month," the analysts said in the report.

"While there are concerns that demand growth is slowing the impact of the Omicron strain remains unclear, this theme, coupled with the coordinated release of crude the US Strategic Petroleum Reserve in early 2022, could see additional oil supplies coming to market," Fitch Solutions analysts added in their report.

Another theme, Fitch Solutions analysts noted, is that U.S. oil gas production is expected to climb significantly in 2022, with crude oil, gas plant liquids other liquids production reaching 1.45 million b/d 8.5% year-over-year.

"Oil gas production is higher despite the reservations of independent, publicly traded shale companies about significantly increasing investment," the analysts said in the report.

Instead, most public companies in the U.S. shale industry are likely to continue to focus on shareholder returns through dividends share buybacks, rather than increasing production more dramatically. Private enterprise, technological advances continued drilling efficiency will drive higher growth.

Fitch solutions analysts continued: "in 2021, though, have spud drilling a drop in the number of unfinished, it may be in view of the region is better higher output, but we expect that as a result of the new exploration area drilling activity increases, efficiency have increased the initial production will continue, down."

Investment will move away upstream Asian giants as downstream investment increases

In the new report, Fitch Solutions analysts also forecast that global oil gas investment will shift upstream to low-carbon efforts.

"An increasing number of listed companies will increase their commitment to reducing the climate impact of their operations, which will shift capital traditional upstream investments to low-carbon ones," the report said.

Analysts also note that the long-held view that the Asian giant will become a bigger downstream refiner in 2022 looks set, given us climate commitments, stagnant demand poor margin prospects for older refineries.

"Increased efforts in the US to curb the effects of climate change will further increase the regulatory burden on refiners," fitch Solutions analysts said.

"For older refiners with less sophisticated refining equipment, this will force refining margins down due to expected increases in compliance costs," they added.

"Asian giants, on the other hand, will benefit growing new refining capacity greater government support for transforming environmental regulations to combat climate change," the analysts continued.

Wood Mackenzie Global Upstream Outlook

In a separate statement recently sent to the US Drilling website, Fraser McKay, vice president of upstream research at Wood Mackenzie, said the global upstream industry will face "peak uncertainty" in 2022, with record cash flows but an increasingly rigorous review process for new oil gas projects.

"With Brent crude at around $70 a barrel, oil gas cash flows are close to historic Z-highs," Mackay said in a statement. At $80 a barrel, oil gas cash flows would soar to $1tn on a post-tax, capex, pre-financing dividend basis."

"That said, for many stakeholders even some ceos, the risks of the industry outweigh its advantages. This tension will define 2022."

Mackay noted that financing for oil gas is becoming increasingly difficult ahead of cop26, adding that the pressure will increase next year.

Mackay said, "Financial institutions with over $130 trillion in assets under management have joined the Glasgow Financial Union with a commitment to net zero emissions. We will see the pool of investor capital shrink, borrowing costs rise it becomes more difficult to finance oil projects."

But lending will dry up immediately, gas -- particularly related to coal decommissioning CCS -- will be spared the worst.

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Source: Sinopec News

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