Upstream Oil and Gas Sector – Resilient Enough to Rise Again

Low oil prices made companies in the upstream oil and gas sector refocus their strategies and strengths on improving operational efficiencies using innovative & cost effective techniques & technologies which ultimately helped them reduce the breakeven costs by almost 40% including US Shale as well as on major deepwater conventional projects. Cost compression has made oil players in the upstream oil sector accelerate the development of their slow-moving offshore projects as steep decline in the upstream investments during the last three years are likely to lead to a tighter oil market in the next three to five years.

Key Takeaways

• Innovative and cost effective measures helped oil companies reduce breakeven costs.
• High upstream investment cuts in the last three years resulted in delay in project investments and hence decline in rate of production from already producing mature fields.
• North Americas will lead the oil production growth for the next 2-3 years.
• The OPEC ‘super group’, including Russia plans to extend the production cut limits even in year 2019 in-case the oil trade below USD50/bbl.
• Oil prices to trade in the price range of USD55-75/bbl for the next two years.

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