Slowdown may impact investment in oil, gas sector - Hindu

NEW DELHI: Predicting that oil price volatility is likely to persist during 2009, consultant Ernst & Young has stated that the economic slowdown around the globe will impact investment in the oil and gas sector.

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In a report on ‘Oil and Gas Outlook 2009,’ the consultant has further stated that the price volatility could result in greater misalignment in asset valuations between buyers and sellers, which could continue to impact mergers and acquisition (M&As) activity through 2009. Although the global economic downturn may lead to a slowdown in oil and gas activity in the next 12 months, long-term fundamentals for the sector remain positive, it adds. Ernst & Young has stated that there are signs that some oil and gas companies are scaling back capital investment plans for 2009. In addition, there have been delays on the final investment decision in some projects. ``Fewer new projects will be sanctioned at oil prices below $50 a barrel. Some oil and gas companies are also re-tendering work on large-scale projects in anticipation of easing equipment and service costs. Marginal projects in mature areas will be among the first casualties of any slowdown in exploration and production spending by oil companies,” it has stated.

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