Upstream capex to fall sharply in 2020

摘要

The impact of Covid-19 on demand and the resulting low oil and gas prices have forced producers to cut back upstream capital expenditure this year,which should tighten supply in future years.Many oil and gas companies have already announced large budget reductions as a result of the Covid-19 crisis,most of which came following Ql quarterly results.Overall,the IEA says investment in the oil sector has been slashed by 30% this year due to the fall in prices and demand.US independents have cut back particularly sharply,and majors are also implementing cuts of 20% to 30%,as discussed in April's O&EMT-although there are now signs that some companies also plan to boost M&A spending,in order to take advantage of low asset prices.One example is US independent W&T Petroleum,which has voiced an interest in snapping up more acreage in the US Gulf,with opportunities expected to emerge through distressed asset sales as some companies struggle to survive.