The Global 2013 E&P Spending Update from the bank offered a bullish outlook on the energy industry, with oil demand continuing to outstrip supply and oil companies spending more to find deposits in more remote places, Reuters reported.
“We do believe the industry in the early stages of a strong, sustained upcycle,” Barclays analyst James West said on a conference call, according to the news wire.
Higher spending in the Middle East, as well as solid E&P budgets in India, Australia and the rest of Asia, would more than offset slowing growth in Latin America, Barclays said.
E&P spending outside North America should rise 13.2% this year, a bigger increase than the more than 9% Barclays had forecast earlier.
Growth in the Middle East is driven mainly by higher spending forecasts for Saudi Aramco, the world’s biggest oil exporter, and increased drilling in Iraq, according to the report.
Barclays forecast a 2% rise in E&P spending in North America this year. It had previously estimated flat year-on-year spending levels for the region.
Strong US land drilling has created a market of “haves” and “have nots” among oil service providers, though spending should still rise in the country, Barclays said.
The relatively slow pace of recovery in the US land market was causing continued challenges for smaller companies, while industry leaders such as Schlumberger, Halliburton and Baker Hughes are expected to benefit from the demand for premium technology and equipment, Barclays said.
E&P companies are basing their spending budgets for the year on oil prices of $101 for Brent, $86.5 for West Texas Intermediate and benchmark US natural gas prices of $3.62, Barclays found in a survey of more than 300 oil and gas companies conducted last month.
The report also said PetroChina is expected to be the world’s largest E&P spender this year, overtaking ExxonMobil for the first time since the 1980s.