Oil, Gas Sector Outlook Positive as Recovery Gains MomentumPublish Date: 2010-03-11 14:00:18 Story Code: 25964 DUBAI - The rising prospects of a global economic recovery is boosting optimism in the energy markets. The oil and gas sector is likely to fare better than most in the year ahead, given the sustained demand for oil, according to a report.
Energy market sentiment remains relatively positive amid rising economic expectations, says the latest quarterly market outlook from Ernst & Young’s Global Oil & Gas Center. “Larger companies in the sector, supported by stronger oil prices and more robust balance sheets, are on the lookout for opportunities to expand their asset base. I believe that more consolidation in the sector is inevitable as larger companies take advantage of the strategic opportunities presented by their junior counterparts,” says Ernst & Young’s David Barringer. A number of IPOs are planned for 2010 and, if successful, it is likely that there will be increasing investor interest in the sector, Barringer said. “More consolidation in the sector is inevitable as larger companies take advantage of strategic opportunities.” Crude oil prices are currently hovering around $80 per barrel. Most energy analysts have predicted oil demand and price to rise in the coming years. Following four years of declines, US, the world’s biggest oil consumer, will see a 1.1 per cent rise in oil use in 2010, driven by an improving economic outlook, US government forecasters said on Tuesday. Demand is expected to average 18.89 million barrels a day, up 200,000 barrels a day from a year earlier. In its Short-Term Energy Outlook for March, the Energy Information Administration slightly increased its growth forecast by 0.2 per cent from the month-earlier projection. In 2011, demand is expected to average 19.1 million barrels a day, also a 1.1 per cent gain. The EIA said its forecast for growth in the US is fuelled by expected growth in real gross domestic product of 2.8 per cent this year, compared with a 2.4 per cent decline in 2009. Last month, the EIA projected an increase of 2.3 per cent for this year. In 2011, the EIA sees US real GDP rising by 2.6 per cent. The oil price is being supported by robust import data from China and an upward revision to the US Department of Energy’s oil-demand projections, said analysts at Commerzbank AG in a recent note. M&A ActivityOptimism is slowly returning to the market, with 837 mergers and acquisition deals are announced worldwide in 2009. “The positive trends that we have seen in recent months are likely to continue into 2010 and the outlook for oil and gas transactions is healthy in upstream and oilfield services,” Andy Brogan, Ernst & Young’s global oil and gas transaction advisory leader, said. In the downstream sub-sector, over-capacity in some regions is likely to drive a longer period of uncertainty and transactional challenges. “But as 2009 has demonstrated, one person’s challenge represents another’s opportunity. Although the volume of deals was down by 24 per cent compared to 2008, the total value of oil and gas transactions was up by 10 per cent to $198 billion,” Brogan said. © Khaleej Times 2010. All rights reserved. Share this story:  Digg
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