Morgan Stanley’s Global Energy & Power conference hosted in New York City last week dwelled around meeting the world’s growing energy needs while balancing a lower carbon future.
Oil and Gas, Exploration & Production companies remain committed to low-to-no production growth outside of a short list of producers with high-return non-shale opportunities.
While most companies expect 10-15% y/y service cost inflation, management teams were optimistic about potential disinflation in the back half of 2023. Some noted that green shoots are emerging, particularly within areas such as steel tubulars.
Lower sand, chemicals, and energy costs should also prove to be tailwinds compared to 2022. E&Ps remain committed to shareholder returns, seeing it as an important part of the industry’s value proposition.
Macro Climate: Companies overall were constructive on oil prices, citing China reopening, still recovering aviation, and subdued supply.
Integrated and Refining & Marketing companies expect to play a key role in supplying the world’s growing energy needs while investing in lower carbon technologies that are synergistic with core competencies, including biofuels, carbon capture, and hydrogen.
Within refining, many remained optimistic that strong margins would persist, driven by a continued recovery in demand and elevated industry turnarounds this year.
Global Gas & LNG says since the price fall from 2022 highs, the demand has started to recover across the globe. While European inventories are well above last year’s levels, meaning LNG imports may need to slow in the coming months, demand in Asia has begun to pick up as an offset.
Asian buyers also continue showing interest in inking contracts with U.S. LNG facilities.
However, the high E P C (engineering, procurement and construction) costs pose a hurdle for greenfield project economies.
Energy Services & Equipment companies felt last year, traditional upstream markets were the most in- focus, but more recently, investors are tilting focus back towards initiatives with higher long-term growth prospects like new energy and digital solutions.
Clean Tech & Renewable Power: Despite the recent decline in natural gas prices, there is a strong demand for wind and solar power. There are signs that the U.S. solar supply chain stresses may be easing, but panel availability still remains a key potential bottleneck in the near …
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