Expenditure and R&D investment in the MENA’s region’s oil and gas sector are set to rise, according to a new survey from DNV GL, the technical adviser to the oil and gas industry
Confidence in the outlook for Middle East and North Africa’s (MENA) oil and gas industry has recovered to levels above global expectations, according to ‘Confidence and Control: The outlook for the oil and gas industry in 2018’ , DNV GL’s annual survey of attitudes in the industry. It finds that 80 per cent of senior oil and gas professionals surveyed in MENA are optimistic about the prospects for their organisation in the year ahead, compared to 66 per cent globally. Last year’s figures were 49 per cent and 44 per cent respectively. However more than half (51 per cent) expect cost control to increase - a rise from 43 per cent last year, amidst concerns of uneconomic oil and gas prices.
Senior oil and gas professionals in MENA expect a positive step change in the industry’s capex, opex, headcount and R&D spending levels in 2018, according to the survey, and confidence around hitting revenue targets is also higher than for global counterparts (73 per cent versus 61 per cent).
After three tough years, overall confidence levels have nearly doubled from 34 per cent in 2017 to 64 per cent for the year ahead, and are now in line with the global figure of 63 per cent. Plans to maintain or increase capital spending in 2018 are significantly higher in MENA, (80 per cent versus 66 per cent), and represent a two-fold increase on last year’s intentions (40 per cent).
The survey also reveals an imminent turnaround in spending on R&D and innovation after three years of cuts and freezes, according to DNV GL, with 42 per cent of senior oil and gas professionals in MENA looking to increase spending on R&D and innovation in 2018.
“The outlook for the oil and gas industry in MENA is one of confidence and control. Though the the oil price is lower, it is at an acceptable level to run a profitable business, if spending is managed effectively and efficiently. In the Middle East, we are now seeing a much longed for focus on investment and plans to bring in new technology and extra skills which suffered severe cuts during the downturn,” said Ben Oudman, regional manager, Middle East and North Africa, DNV GL – Oil & Gas.
“Industry leaders and technical experts questioned in our survey cite R&D as the main area for increased spending. This is an area which has suffered the most in the past three years, so it is very encouraging to see a positive turnaround to allow those companies to realise improved profits and performance.”
Barriers to growth related to increased operating costs and a weak global economy are all expected to subside in the coming year, while geographical instability in key markets, lack of investment in innovation, and a shortage of skills are growing. The greatest challenge cited by MENA respondents is uneconomic oil price, although this has fallen significantly as a key concern from 66 per cent in 2017 to 42 per cent this year.
Download a complimentary copy of Confidence and Control from: dnvgl.com/industryoutlook2018