Offshore staff

LONDON – The oil and gas industry appears well prepared to deal with any further volatility in 2019, according to Wood Mackenzie.

Tom Ellacott, the consultant’s senior vice president, said: “Portfolios are set to weather low prices, and the recent slide in prices justifies the sector’s conservative mindset. In our view the commitment to capital discipline will not budge entering the New Year.

“But the temptation to relax the purse strings will grow if prices bounce back. If oil prices return to $70/bbl or above, the cash windfall generated is huge and will inevitably drive sentiment back in favor of growth.”

More controlled allocation of capital since 2017 has returned exploration to profitability, Wood Mackenzie added, with Guyana, Brazil, Mexico, the US Gulf of Mexico, Cyprus, South Africa, and the Barents Sea in Norway set to lead exploratory drilling next year.

Biggest projects set to go forward are likely to involve deepwater oil off Brazil and Guyana. The consultant foresees 45 to 50 large final investment decision (projects with more than 50 MMboe of commercial reserves) in 2019, up from around 40 in 2018.

It could also be a potentially record year for LNG project sanctions, with a final investment decision for at least one project offshore Mozambique, and potential expansions in Qatar and Nigeria.

12/17/2018