Natural gas developments are more likely to attract investments in current market scenario

GlobalData Energy 14 October 2020 (Last Updated October 14th, 2020 17:22)

Natural gas developments are more likely to attract investments in current market scenario

The outbreak of Covid-19 and the consequent fall in oil prices have battered the entire oil and gas industry. As a result, several companies have resorted to aligning their capital expenditure to postponing investment decisions in a bid to survive in the current market scenario. Operators seem to have limited choices in a complicated market like this, however natural gas seems to be a safer bet for investments, considering its status as clean fuel over others and projected strong growth in global gas demand over the long-term. A GlobalData’s recent poll has confirmed the same, where 38 percent of the respondents believed that integrated LNG and greenfield gas projects are more likely to attract investments in the current market scenario.

Around 20% of the respondents felt that unconventional resources have a higher likelihood of attracting investments, after expected gradual recovery of oil prices by next year. Growth in oil prices is the most important incentive for unconventional oil producers in the US to re-start investments in the industry.

Surprisingly, near-field tie-ins, greenfield oil, and expansion projects are all expected to have equal investment opportunities, with each accounting for 14% of respondents’ votes. Near-field tie-ins provide affordable solutions for operators looking for short to medium-term production boost and gain a quicker return on investments. The chances of expansion projects attracting investments are also probable, given the relatively low costs and less time taken for completion. However, some of the respondents felt that greenfield oil projects could have equal investment opportunities, despite the need for high investments and the longer duration required to break even, when compared to near-field tie-ins and expansion projects.