Aberdeen, UK, 31 January 2023: A 2022 review of upstream oil and gas from Westwood Global Energy Group (Westwood), the specialist energy market research and consultancy firm, depicts a turbulent year for the industry, with a constant battle between the energy transition and societal pressures to maintain energy supply. What’s more, despite substantial revenues generated by high oil and gas prices in 2022, oil companies are being slow to reinvest and are instead focussing on returning value to shareholders and reducing debt.
Graeme Bagley, Head of Global Exploration and Appraisal, Westwood said: “The impact of high and volatile oil prices on the industry and society has well and truly been brought to bear. Pivoting from an oil price crash sparked by the pandemic to a war-related, sanctions-driven collapse in supply and an oil price peak all in two years is extraordinary – even in the context of the oil price roller-coaster seen over the last 12 years. And shareholders have been the biggest beneficiaries– with 44 cents in every extra dollar of cashflow going to shareholders and just 12 cents to increased capital expenditure.”
Bagley continues, “Gas has had a similarly turbulent journey, with prices in Europe leading to huge arbitrage opportunities and a profit boom for the trading houses and oil company trading divisions. The impact of high energy prices on society at large forced governments in Europe into massive support programmes, subsidising gas and electricity for consumers, paid for in part by windfall taxes on energy producers.”
“Looking ahead to 2023, European gas prices will continue to be volatile and hard to predict, whilst shareholder pay-outs are expected to continue. Companies that have prioritised the energy transition may exit the sector whilst those that choose to remain will be willing buyers of attractive assets.”
Westwood’s full 2022 upstream oil and gas review of the year can be accessed here.
About Westwood Global Energy Group
Every day, organisations throughout the onshore and offshore energy value chain ask strategic, technical and commercial questions and turn to Westwood Global Energy Group for the answers. As trusted advisors to companies in key sectors, Westwood Global Energy Group chooses to focus on areas of the industry traditionally underserved by other players.
The Energy Transition means that businesses are facing both new opportunities and risks in how they operate. We are committed to helping the energy industry navigate the transition successfully, by leveraging our extensive track record in providing actionable insight and advice that businesses, industry bodies and investors have relied upon time and time again. From the depth of our data to the insight from our industry experts, our commercial advisory to our quantitative techniques and databases – we insist on excellence in everything we do.
Westwood Global Energy Group is headquartered in London and has offices in Aberdeen, Houston and Singapore.
Victoria Chilton, Aspectus Group