OIL & GAS MARKETS • DEPARTMENTS
Energy Council’s 2023 Global Industry Survey finds
energy transition at top of strategic priorities list
The energy transition topped the list
of strategic priorities for the next year,
according to an Energy Council survey
of more than 500 people. M&A, financing
and cost reduction followed as the next
priorities in the 2023 Global Industry
Survey. More than 40% of participants in
the survey were from oil and gas com-
panies, while other participants came
from a mix of consultancy/law firms,
non-financial service providers, inves-
tors, power/utility companies, and gov-
ernment/NOC. One question the survey asked was
whether participants were expecting any
revenue from green initiatives in 2023.
Nearly 50% said no , while approximately
35% said less than half of their revenue
will come from green initiatives and 10%
said they expect more half will be from
green initiatives.
When it comes to growth inhibitors
for their organizations, the biggest per-
centage of participants (25%) said it was
lack of access to capital, while the next-
largest percentage (21%) said regulatory
change. Additionally, 15% of people cited
talent as an inhibiting factor .
Oil and gas companies were also
asked where they were most likely to
get their financing from in 2023, and
31% said private equity. The next top
answers were debt financing and insti-
tutional lenders.
When it comes to exploration, the sur-
vey also found that approximately 65%
of respondents believe exploration will
What are your strategic priorities
over the next 12 months?
10% 3%
Digital technologies
Other 21%
11% Exploration
Explor ation
Ener gy TrTrTransition
ansition Energy
16% 12%
JV /Str ategic
JV/Str Allian ces
ce s
Alliance 13%
Cost r eduction
M&A/ A&D
Activi Activitytyty
14% Raising
Finance e
Financ The largest percentage of respon-
dents (21%) cited the energy transition
as a strategic priority for their organi-
zation over the next year.
play a key role in their businesses. That’s
an increase of 13% compared with the
2021 survey and up 6% compared with
2022. For the third year in a row, West
Africa and South America were the top
spots where respondents saw the biggest
E&P opportunities.
Looking at the future of oil prices,
the biggest percentage of respondents
(nearly 60%) said they expect pricing to
stay between $75-100, up from about 50%
last year. Fewer people this year (13%)
said they believe prices will exceed $100,
compared with nearly 25% last year.
Europe may need 55 bcm cut
in gas demand to avoid risks
from supply reductions
Failure to immediately reduce gas
demand by 55 billion cu m (bcm) could put
Europe at substantial risk from a rebound
in Asian demand or reductions in Russian
imports, according to McKinsey & Co. A
total cessation of Russian imports could
reduce Europe’s supply by 25 bcm, and
renewed Asian LNG demand could soak
up 35 bcm of supply while a colder winter
in 2023 could boost demand by 15 bcm.
The research indicates that 57% of EU
manufacturers would not be able to further
reduce gas consumption while maintain-
ing output over the next two years, indi-
cating that further gas rationing measures
could substantially impact the economy.
Even if Europe meets targets to reduce
gas consumption , volatile gas prices and
potential supply disruptions still pose a
risk to many economic sectors. McKinsey
projects that Europe may need to delay the
phase-out of coal, extend the lifetime of
nuclear plants and accelerate the expan-
sion of renewable energy sources to reduce
reliance on gas as a baseload .
“Our analysis shows there is little
bandwidth to further reduce Europe’s gas
demand without substantial economic
damage,” said Namit Sharma, McKinsey
Senior Partner . “ The many variables at
play will produce significant uncertainty,
and Europe’s businesses may need to pre-
pare to mitigate these risks. This may
require businesses to consider diversify-
ing their energy sourcing and managing
demand, investing in natural gas substi-
tutes or storage, and closely monitoring
movements in the energy market.”
Texas Petro Index down amid weak oil and gas pricing, falling value of production
The Texas Petro Index (TPI) declined for
the third straight month in April, retreat-
ing to 176.9 for the month. This is down
from 177.8 in March, but up by 12.3% com-
pared with the April 2022 TPI of 157.6.
Weak pricing for crude oil and natural
gas are largely responsible for the decline,
with downward pressure on the index
coming from prices themselves, as well as
the falling value of crude oil and natural
gas production. Drilling permits also reg-
istered year-over-year negatives for April .
Nominal (unadjusted for inflation) crude
oil prices averaged $75.22 for the month.
This is down 23% compared with year-ago
levels. In real ( inflation-adjuste d) terms,
the April crude oil average is down by
nearly 27% year-over-year. Nominal natu-
ral gas prices are down a sharp 71% in
April compared with year-ago levels, and
in real terms were off by close to 73%.
That means that, even though production
continues to climb, the real value of that
production is down by over 20% for crude
oil and nearly 60% for natural gas through
the first four months of the year.
“Declining prices, followed by a decline
in drilling permits, suggests that the rig
count will weaken in the coming months ,”
said Karr Ingham, creator of the TPI analy-
sis. “At some point, employment will fol-
low suit. We can hope that the economy
shrugs off a recession and that growing
domestic and global demand will begin to
stabilize prices and return some optimism
to the oil patch in 2023.”
D R I L L I N G C O N T R AC T O R • J U LY/AU G U ST 2023
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