Jan. 20 (UPI) — Expectations about healthy global demand for crude oil and natural gas should continue to support investments in exploration and production, the head of industry services company Schlumberger said Friday.
Schlumberger operates primarily in the upstream energy sector, the exploration and production side of the industry. The company realized healthy returns for the fourth quarter, posting revenue of $7.8 billion, 27% higher year-on-year.
“In the Middle East, revenue increased by double digits sequentially, with growth in Saudi Arabia, Iraq and the United Arab Emirates in the solid teens, affirming the much-anticipated acceleration of activity in the region,” CEO Olivier Le Peuch said. “Offshore activity continued to strengthen, partially offset by seasonality in the Northern Hemisphere. In North America, U.S. land rig count remains at robust levels, although the pace of growth is moderating.”
The moderation of growth in the U.S. shale oil patch is something of a concern for market watchers fretting over the lingering supply-side challenges emanating from the war in Ukraine.
But while the pace of growth is slowing, production is still healthy. The federal government expects total crude oil production to average 12.4 million barrels per day in 2023, a record if the forecast is accurate, and increase to 12.8 million bpd by next year.
Most of Schlumberger’s revenue, however, came from operations outside of North America.
Broader supply-side woes, coupled with fears of a global economic downturn could be bruising for the industry nevertheless. But recent data suggest the downturn won’t be as severe as many analysts expected in 2022 and Le Puech said the future looks “very compelling.”
Oil demand is expected to tick higher this year, efforts to bolster European energy security against the loss of Russian supplies due to war-related sanctions and resurgent demand in China all support a positive outlook for upstream players.
“Based on these factors, global upstream spending projections continue to trend positively,” he said.