Global Oil and Gas Survey 2012–2013 Market Trends, Buyer Spend and Procurement Strategies in the Global Oil and Gas Industry

Thursday 16 August 2012, Amsterdam

Across the global oil and gas industry, 57% of respondents are more optimistic of revenue growth for their company over the next 12 months. Furthermore, 26% are neutral about revenue growth, while 15% of respondents are less optimistic about their company’s revenue prospects. The survey responses suggest either a strong belief in an end to the global economic upheaval, or successful steps being taken by companies to increase revenues and reduce costs. The emergence of new profitable markets and decreased concerns about the Greek debt crisis are other key reasons for the rise of optimism within the global oil and gas industry. The use of natural gas in commercial vehicles and for industrial purposes is further driving up investment in storage infrastructure for refined petroleum products, such as compressed natural gas (CNG) and liquefied natural gas (LNG).

Global oil and gas industry respondents identify the Middle East to be the most important region for growth among emerging markets, along with China and Brazil. Furthermore, Brazil and the Middle East are considered the two most important emerging markets by respondents from upstream oil and gas companies, with strong economic growth in both areas, along with high demand for oil and gas, rendering them attractive to foreign investors.

According to the survey, 46% of global oil and gas industry respondents rate ‘market uncertainty’ as the most important business concern during 2012-2013, while 38% rate ‘rising competition’ as the most important, followed by another 36% rating ‘retention or recruitment of skilled staff’ as a chief concern. Furthermore, respondents from global oil and gas industry companies, regardless of size, consider ‘market uncertainty’ and ‘rising competition’ as the important leading business concerns.

The average size of the global annual procurement budget among oil and gas industry buyers is forecast at US$125.6 million for 2012. A comparison of global procurement budgets by operating region shows that global oil and gas industry buyers with leading operations in the Rest of the World have the highest average procurement budgets in 2012, at US$170.2 million.

‘Quality’, ‘level of service’, ‘supplier’s record for reliability’, and ‘price’ are considered important factors for supplier selection in the global oil and gas industry, while ‘supplier’s environmental record’, ‘proximity of supplier operations’, and ‘supplier’s CSR reputation’ are considered the least important. Buyer company respondents are prioritizing procurement objectives such as ‘increased use of technology’, ‘increase supplier compliance’, and ‘improve the security of supply’ for the next 12 months.

The optimism level in the upstream oil and gas sector is expected to be fuelled by improved cash flows and credit metrics as a result of higher oil prices. In the case of downstream and midstream companies, contract backlogs and the rise in oil prices are expected to provide the required support to activity levels and credit profiles of companies operating in the sector.