GLOBAL SPENDING on oil and gas exploration and production will rise 11 per cent to almost €3.1 billion this year, reversing a drop in spending in 2009 as energy prices climb, according to a survey conducted by analysts at Barclays Capital.

The increase shown by the survey of 387 oil and gas producers follows the drop in spending of 15 per cent in 2009 from the previous year, when oil prices reached a record high.

The Barclays’ analysts said spending in the United States is expected to rise by 12 per cent to €55.3 billion, while Canadian budgets will rise by 23 per cent to €16 billion.

Outside North America, spending is expected to rise 10 per cent to €236 billion, largely driven by national oil companies, the analysts said.

Spending on exploration and production is heavily dependent on oil and gas prices, and is the key driver of revenues for oilfield services companies. Oil prices had peaked above €103 a barrel in July 2008 before crashing to near €21 in December that year, forcing energy companies to shelve many new projects in an industry-wide round of belt-tighening.

For this year’s survey, companies were basing their spending projections on a US crude oil price of €49.13 per barrel, up from the €35.14 level that they used for the previous survey that was issued in June.

Barclays said about 45 per cent of the companies surveyed expect to spend a greater share of their capital expenditures on exploration and production in 2010.

In Russia, the survey showed a strong turnaround after the 30 per cent decline in spending this year from 2008. Overall spending on exploration and production was expected to rise by 20 per cent. Spending on exploration and production in the Middle East and Africa would rise by 15 per cent from 2009 levels. – Reuters