SPECIAL FOCUS

What’s ahead in 2000

Although oil prices are almost twice what they were a year ago, 2000 is viewed with cautious optimism. Curbing the enthusiasm are a continuation of merger activity, skepticism over OPEC resolve and a looming shortage of experienced personnel

s suggested by a World Oil advisor in the following special report, there may be more people in this industry raising their champagne glass on December 31st to bid good riddance to 1999 than to welcome 2000. And it could be this gloomy past that is inducing the caution that many are predicting for next year. However, as pointed out by another advisor, too many industry analysts tend to base their projections on past or recent events than on actual market fundamentals.

Overall, the consensus calls for an up year in 2000. Prices are expected to range from $22 to $26 for oil and $3.00 to $3.50 for natural gas in the U.S. This should cause drilling in the U.S. to rebound by 25% from the 50-year low recorded this year. Canadian drilling will rise too, but the rest of the world will lag because of uncertainties over mergers and OPEC resolve.

A common thread in some of the discussions is the need to focus on core assets or areas where a company is (or can become) the dominant player. Also, with the market’s volatility, successful firms will have to juggle seemingly at-odds goals in order to make acceptable returns.

Unfortunately, the North Sea will continue to see weak activity, mainly due to its maturity, i.e., smaller fields and a decline in new prospects. But deepwater areas, from the Gulf of Mexico to Brazil and West Africa, still offer many opportunities for both new reserves and for developing new technology. Look for an even greater focus by service / supply companies on expanding product portfolios so as to provide enhanced packages of integrated solutions.

Copyright © 1999 World Oil
Copyright © 1999 Gulf Publishing Company