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Oil & Gas Industry Analysis: 2013 is expected to be a hard year for oil & gas segment due to lower consumption.
While the oil segment is operated on a global scale, the natural gas segment tends to be more localized, due to high transport costs and the need to ensure adequate transport infrastructure. In its January report, the Organization of the Petroleum Exporting Countries (OPEC) reports that in 2012, the increase in production in OPEC countries was just 0.54 million barrels per day, as a result of record deceleration in the Middle East and Africa. However, in North America, the increase stood at more than one million barrels per day.
The global oil and gas market declined by -2.1% in 2012, to reach a value of $3,065.7bn, representing a compound annual growth rate of 1.7% for the period spanning 2008-2012.
The decline was primarily driven by regions of Africa and Middle East. 2012 was a difficult year for the oil and natural gas market due to a sharp fall in consumption, which occurred at a rate of about 0.4 million barrels per day in OECD countries, mainly in Europe. It was, however, compensated by an increase in purchases in non-OECD countries to some extent.
Oil and gas production can still be strongly influenced by unrest in North Africa between Algeria and neighboring Libya. The two countries’ total production accounts for about nine per cent of OPEC’s entire production. Blockages and incidents in some of these countries may further complicate the situation, and have direct influence on price and eventually demand.
Also, Iran, has decreased its production by more than a quarter as a result of sanctions imposed on it, influences the situation of OPEC. Overall OPEC production was nearly one million barrels per day lower in 2012.
Anticipating what might happen in the markets for crude oil and natural gas, decisions taken by Saudi Arabia must also be particularly carefully analysed, as they are bound to further impact on the balance of OPEC.
In 2013, trends in oil and natural gas market may be similar to ones displayed in 2012. However, the decline in demand in OECD countries should no longer be so severe – according to the forecast it should not exceed 0.2 million barrels per day.
For more, you may have look on our recently published ‘Industry Reports on Oil & Gas Sector’.