Oil and gas companies will increase spending on exploration and production by more than 5 percent this year as the outlook for commodity prices improves, Wood Mackenzie, a consultant, said in an e-mailed report today.
Investment may exceed $380 billion, up $19 billion from 2009, Iain Brown, the Edinburgh, U.K.-based company’s regional upstream research manager, said in the report. Spending may recover to a record level set in 2008 by 2012 or 2013, he said.
The global economic crisis that started in late 2008 caused a slump in energy demand that brought oil prices from a peak above $140 a barrel in July 2008 to below $40 by December that year. The 2010 spending forecast is still 10 percent below the level in 2008, Brown said.
“Confidence has returned to many regions and sectors of the industry although this effect is far from consistent across the world,” Brown said. “Many plans have been restored or expanded, in the expectation that demand and commodity prices will remain relatively robust over the longer-term.”
The U.S. showed “the most spectacular recovery,” supported by investments in unconventional resources, in particular shale gas, Brown said. U.S. spending may return to peak levels by 2011, and Australia’s expenditure may grow three-fold by 2013, he said.
Investments in Canada and Russia have had a “modest recovery” and current plans showed spending may not return to 2008 levels until 2020, Brown said.