Moody’s expects high crude oil prices and weak natural gas prices to continue into 2012 and beyond, as political strain in the Middle East and overproduction of North American natural gas continue.
New transportation options will relieve the bottleneck that caused an unprecedented decoupling of US and European crude prices in 2011.
The spread between WTI and Brent crude, which approached $30 in 2011, will narrow to about $5 in 2012.
The oil majors and national oil companies (NOCs) will ramp up their shale investments both inside and outside North America in 2012, with investment especially picking up in China, Argentina and Poland. Numerous majors, including Royal Dutch Shell, BP, ExxonMobil, Total and ConocoPhillips, will keep pursuing joint ventures and investments in these countries. Asian NOCs, such as Malaysia’s Petronas and China’s CNOOC, may eye further investments in North American shale.
The shale revolution has shifted the oil and natural gas production landscape in North America, creating a great opportunity for midstream companies to build new gathering, processing, transportation and storage assets. Companies such as Plains All American Pipeline, Kinder Morgan Energy Partners and Enterprise Products Partners, will be poised to build on their existing assets near the Bakken and Eagle Ford shale plays, among many other booming regions.
Oilfield services (OFS) and drilling companies will continue to thrive, as high oil prices keep exploration and production (E&P) activity strong in 2012.