High oil and gas prices are fuelling growth in petroleum exploration spending
Melbourne, Australia (PRWEB) April 19, 2012
The Petroleum Exploration industry plays a key role in forming the future of oil and gas production. Its activities uncover the oil and gas reserves that underpin developments in the Oil and Gas Production industry. IBISWorld industry analyst Kate Convey says ‘although oil and gas prices in US dollars are expected to rise strongly in 2011-12, some of those gains will be eroded for Australian producers by the firming of the Australian dollar.’ Spending on petroleum exploration is expected to grow by about 1.0% in 2011-12 to about $3.48 billion. High oil and gas prices over the five years to 2011-12 underpinned growth in exploration spending, which is expected to increase an average annual rate of 5.4%.
The Petroleum Exploration industry neither generates revenue nor earns a profit in its own right. Instead, exploration activity and spending are essentially an input into future resource development. As a result, the revenue and profit flowing from exploration successes are reaped by the Oil and Gas Production industry. Both foreign and local firms are active in oil and gas exploration, but by definition, the industry does not engage in international trade. The Petroleum Exploration industry has medium level of concentration. Convey adds, ‘the high cost of oil and gas exploration tends to make it the province of firms, many of them multinational operators, which are already major players in oil and gas extraction.’ Woodside Petroleum, BHB Billiton, Santos, ExxonMobil Australia and Shell Australia are the major players in the industry.
The global demand for oil is expected to continue growing as world economic growth firms and US dollar oil prices trend up. An expected softening in the Australian dollar will amplify those price increases in local currency. As a result, exploration spending is expected to expand strongly in the five years to 2016-17. Oil demand will continue to be led by China and, to a lesser extent, India over the next five years. New capacity is expected to come onstream in several oil-producing countries including Saudi Arabia. Within this overall outlook, there is always the potential for political events or natural disasters to give rise to sharp and substantial, if short-term, movements in oil prices.
For more information, visit IBISWorld’s Petroleum Exploration report in Australia industry page.
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IBISWorld industry Report Key Topics
Firms in this industry explore for crude petroleum and natural gas. Typically, these firms are oil and gas producers seeking to expand their reserves. The industry does not include firms undertaking exploration on a fee or contract basis for other companies or firms providing exploration services.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalisation & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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