Globally, the impact of Western sanctions and the G-7 price cap on Russian oil will be the top issue for the oil and gas sector in 2023.
That’s what Matthew Bey, a Senior Global Analyst for risk intelligence company RANE, said when asked what the top theme would be for the oil and gas industry this year.
“While oil prices have not risen significantly since the G-7 price cap on Russian crude oil was introduced in December 2022, there’s a risk that oil prices rise in the second half of next year should economic growth in the developed economies and China, once its Covid-19 outbreak starts to die down, drive higher demand for oil,” Bey told Rigzone.
“For oil and gas companies this will spur more calls to expand investment if prices rise and any acceleration in drilling and completion activities could exacerbate lingering shortages of manpower, equipment and supplies oil companies face,” he warned.
When asked the same question, Micah Smith, a Senior Partner and Global Oil & Gas Practice Leader at McKinsey & Company, told Rigzone that one word that will define the oil and gas industry in 2023 is “and”.
“As the industry continues to adjust to a new challenging reality, the imperative will be achieving the balance of clean and affordable and plentiful and secure energy,” Smith said.
“This challenge will be exacerbated by potential recessionary headwinds, continued geopolitical tensions, and higher interest rates which will hinder the needed large-scale investments. At the same time, the world continues catching up on two years of global underinvestment in hydrocarbons during and after Covid-19, despite demand growth that has returned to pre-pandemic levels and continues to increase,” he added.
“The oil and gas industry will need to balance targeted growth and streamlined barrels to market without losing its capital discipline and focus on returns, as well as increase investments in natural adjacencies such as renewable fuels and CCUS, which will continue to accelerate decarbonization while at the same time ensuring an orderly transition,” Smith went on to state.
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