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Global E&P spending may drop 15 pct in 2016, says Barclays

Published 13/01/2016, 07:26 pm
© Reuters.  Global E&P spending may drop 15 pct in 2016, says Barclays
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Jan 13 (Reuters) - Global oil and gas companies plan to cut spending on exploration and production by about 15 percent if crude oil prices trade in the $45-$50 per barrel range, but the cuts could be closer to 20 percent if prices hover at $40 per barrel, Barclays (L:BARC) said.

Crude futures rose on Wednesday for the first time in eight days, with the global benchmark Brent crude LCOc1 up 20 cents at $31.06 a barrel and the U.S. West Texas Intermediate crude (WTI) CLc1 rising 27 cents to $30.71 a barrel.

Spending in North America will decline 27 percent in 2016, based on Barclays' survey of 225 global oil and gas companies when Brent was trading at about $50 a barrel and WTI at $45 a barrel.

North American upstream spending could be down 40-50 percent if current futures prices hold at around $34-$35 per barrel, Barclays added in its annual Global E&P Spending Outlook report.

International spending could fall 11 percent in 2016, with the Middle East still the lone source of strength as spending there is expected to rise 6 percent, Barclays said.

This is only the eighth time in the survey's 31-year history that global spending is estimated to fall, Barclays said, while noting it is the first time spending will fall in consecutive years since 1986/1987.

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