Global Oil & Gas Capital Expenditure Remains 25% Below Pre-Pandemic Level, Report Says
August 20 2021 - 7:29AM
Dow Jones News
By Jaime Llinares Taboada
Oil and gas prices have recovered from last year's lows, but
companies are holding back from raising their investment budgets
too much, a report by RBC Capital Markets suggests.
Capital expenditure across the global oil and gas supply chain
is expected to modestly increase in 2021 from a year earlier, but
will remain well below 2019 levels, according to the Canadian
bank.
The 2021 investment budget for the 190 oil and gas companies RBC
analysts track totals $348.0 billion. This is up 4% from $334.7
billion in 2020, when the industry slashed spending as lockdowns
and other coronavirus-induced restrictions hit fuel demand and
prices. However, the 2021 capex forecast is 25% lower than the
$461.7 billion spent in 2019, the report says.
"Companies continue to hold the line on spending and activity
with many staying steadfast on maintenance plans through the
remainder of 2021," RBC said.
Ten national oil companies, such as Saudi Arabian Oil Co. and
PetroChina Co., are expected to spend a combined $170.35 billion
this year, up 12% from 2020 and 3.4% below 2019 levels.
Conversely, integrated oil majors appear to prefer to hold a
tight purse. BHP Group Ltd., BP PLC, Chevron Corp., ENI SpA,
Equinor ASA, TotalEnergies SE, Galp Energia SGPS SA, Royal Dutch
Shell PLC, Repsol S.A. and Exxon Mobil Corp. have an aggregated
capital expenditure plan of $78.21 billion for 2021, according to
RBC. This is 1% higher than $77.82 billion last year, and 29% lower
than $110.03 billion in 2019.
"Reinvestment frameworks, boosted shareholder return/debt
reduction plans and service cost pressures provide guardrails to
2022 spending increases which we expect results in most companies
targeting maintenance/modest growth rates next year," RBC said.
Write to Jaime Llinares Taboada at jaime.llinares@wsj.com;
@JaimeLlinaresT
(END) Dow Jones Newswires
August 20, 2021 07:18 ET (11:18 GMT)
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