Growing belief in prospects for gas spur East Mediterranean oil and gas industry’s confidence, raising expectations of higher capital spending and headcount

Oslo, 22 January 2019: Driven by opportunities stemming from the region’s vast gas reserves, three quarters (75%) of East Mediterranean senior oil and gas professionals expect their companies to increase or maintain capital expenditure (capex) in 2019. More than a fifth (22%) expect to increase overall headcount this year, nearly double the 12% who anticipated doing so in 2018, and a seven-fold increase compared with only 3% in 2017

• Driven by opportunities in gas, 75% of the East Mediterranean’s senior oil and gas professionals expect to increase or maintain capital expenditure in 2019
• 22% predict greater recruitment this year, nearly double the 12% seen in 2018
• 50% cite the growing importance of LNG as a transportation fuel as a factor driving their investment in natural gas and/or LNG
• 76% are confident of achieving revenue targets this year.

This boost to confidence in the oil and gas potential of a region where geopolitics complicate development of reserves is confirmed in new global research by DNV GL, the technical advisor to the global oil and gas industry. It comes despite 50% of the East Mediterranean industry’s leaders surveyed for the research saying not enough investment is being made in LNG and pipeline infrastructure. 

These findings come as DNV GL publishes A test of resilience, the company’s ninth annual report on the outlook for the oil and gas industry. The research provides a snapshot of sector confidence, priorities and concerns for the year ahead. It is based on a global survey of nearly 800 senior oil and gas professionals and in-depth interviews with sector leaders. 

The research finds that nearly half  (47%) of senior oil and gas professionals in East Mediterranean countries  expect demand for gas to exceed supply within five years. More than half (57%) believe that gas will overtake oil to become the world’s primary energy source before 2025. This broadly aligns with the forecast in DNV GL’s 2018 Energy Transition Outlook that global upstream gas capital expenditure will grow to a peak of USD1.13 trillion in 2025, enabling gas to overtake oil as the world’s primary energy source in 2026. 

More than half (53%) of East Mediterranean respondents say it is likely that their companies will invest in, or diversify into, upstream gas activities this year. 42% will likely invest in, or diversify into, midstream gas activities. Just over a third (36%) expect to invest or diversify into downstream gas activities.  

Confidence in the East Mediterranean oil and gas industry’s growth prospects in 2019 has risen from 59% to 72% in a year, supported by their belief in the prospects for natural gas and LNG. More than three quarters (76%) expect to achieve their revenue targets this year, and nearly two thirds (64%) expect to make their profit targets.  “The figures in our research underline how the scale and timing of the opportunity in the East Mediterranean are sustaining the industry’s interest despite undoubted obstacles. Competitive pressure, geopolitical instabilities and the global economy are the barriers to growth in the region, according to our research,” said Ben Oudman, Regional Manager, Continental Europe, Middle East, East Africa and India, DNV GL - Oil & Gas. 

“Half of industry leaders in the East Mediterranean cite the growing importance of LNG as a transportation fuel as the primary factor driving their companies’ investment in natural gas and/or LNG. Consequently, the percentage calling for more investment in LNG and pipeline infrastructure reinforces just how committed they are to the prospects they see in the region,” Oudman added.