Company executives have a positive outlook for the oil, gas and chemicals markets, according to a survey consisting of 325 interview with experts in the oil, gas and chemicals industry. Upstream companies are focusing on near-term strategies, specifically lowering costs, increasing efficiency and maintaining robust production. Fifty six percent of upstream executives also plan to increase exploration and development expenditures, while 61% and 56% plan to grow rig deployment and staffing in 2019, respectively. Midstream companies are investing in infrastructure, thanks to growth in both upstream and downstream operations. These companies are also focusing on natural gas and natural gas liquids, as they have a more favorable commodity price outlook.

Continuing moderate growth is the top priority for downstream companies, which expect to increase refining margins, exports and capital expenditure spending. The Gulf Coast was cited by 62% of respondents as the region with the most opportunities, with the Pacific Coast, Midwest and Appalachia, Rocky Mountains and the East Coast following, with 44%, 39%, 37% and 31%, respectively. Oil-based infrastructures were listed as having the greatest potential for growth, jumping 28%, while natural gas gathering and processing potential grew 6% and refined oil product pipelines grew 3%. The growth potential for natural gas pipelines fell 11%.

Downstream firms are focusing on costs and regulations, including environmental regulations. Most downstream companies have a positive forecast of modest growth, as export volumes are at record highs and predicted to continue their upward trend, as 72% of executives expect a net increase. About 64% expect a net increase in downstream spend, with 48% predicting up to a 10% increase in their spending.

Chemicals and specialty materials cited consolidation opportunities, digitization and overall growth in the sector as areas of interest, but, similar to downstream companies, chemicals and specialty materials firms are concerned about regulations. Risks within political administrations around the world, and fluctuating customer expectations were also listed as concerns, while innovation, sustainability and the supply chain are the highest-priority strategic sectors within the industry. Approximately 85% of respondents believe the chemicals sector is digitally mature at a moderate to high level.

Sixty percent forecast M&A activity to rise by 2019. Consolidation through M&A was seen as a major key strategy across all sectors. Oil and gas companies expect oilfield services as having the greatest potential for consolidation, while chemicals executives expect most consolidation to take place in their own sector.

Source: Deloitte