Deloitte: Oil, Gas Upstream to Generate $800bn This Year

The upstream of the global oil and gas industry could generate as much as $800 billion in cash flow on the back of favourable oil prices, Deloitte Consulting has said.

In its “2024 Oil and Gas Industry Outlook “, the global consulting and related services firm stated that the energy landscape continues to be shaped largely by four disruptors.

It listed them as: Geopolitical factors, macroeconomic variables such as high interest rates and rising materials costs, evolving policies and regulations, and the emergence of new technologies.

According to Deloitte, these disruptors can have a significant impact on demand and supply, and trade and investment within the crude oil and natural gas industry.

Despite these disruptions, it said the industry is expected to have a solid start in 2024 due in part to its strong financial position and high oil prices, barring further deterioration in the macroeconomic environment.

“ This strength of the industry will likely enable it to finance both investments and dividends, and thus support its disciplined capital programme and shareholder-focused strategy.

“The global upstream industry, for example, is projected to maintain its 2023 hydrocarbon investment level of about $580 billion, an increase of 11 per cent year-over-year and generate over $800 billion in free cash flows in 2024,” it added.

However, the report noted that this continued financial strength of the industry is likely to raise expectations of investors, regulators, and other stakeholders, who may anticipate further progress in emissions reduction, augmented investments in low-carbon energies, and amplified returns for shareholders.

These expectations, it said, may serve as a driving force, spurring companies to focus even further on both emission reduction and economic performance.

It said five tends will play an important role in shaping the strategies and priorities of oil and gas companies in 2024, including energy transition.

According to Deloitte, the four disruptors shaping the energy landscape (geopolitics, economics, regulatory, and technology) have also impacted the global downstream petroleum sector.