• Login
NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
  • Home
  • News
    • General
    • Political
  • Economy
  • Business
    • Agribusiness
    • Aviation
    • Banking & Finance
    • Energy
    • Insurance
    • Manufacturing
    • Markets
    • Maritime
    • Real Estate
    • Tourism
    • Transport
  • Technology
    • Telecom
    • Cyber-security
    • Cryptocurrency
    • Tech-guide
    • Social Media
  • Features
    • Interviews
    • Opinions
  • Reports
    • Banking/Finance
    • Insurance
    • Budgets
    • GDP
    • Inflation
    • Central Bank
    • Sec/Gse
  • Lifestyle
    • Sports
    • Entertainment
    • Travel
    • Environment
    • Weather
  • NRTV
    • Audio
    • Video
No Result
View All Result
No Result
View All Result
NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
No Result
View All Result
Home Economy

Oil and gas in for turbulent year as governments and industry butt heads

3 years ago
in Economy, Energy, Features, highlights, Home, home-news, latest News, Markets
2 min read
0 0
0
Oil exploration survey vessel and self propelled oil rig from Angolan oil fields for cheaper parking at Walvis Bay, Namibia, Africa

Oil exploration survey vessel and self propelled oil rig from Angolan oil fields for cheaper parking at Walvis Bay, Namibia, Africa

162
VIEWS
Share on FacebookShare on TwitterShare on Linkedin

Oil and gas in for turbulent year as governments and industry butt heads

Windfall taxes, price caps, and calls for more oil and gas production marked 2022 in oil and gas. It looks like we’re in for a lot more of the same this year, especially with Western governments doubling down on their emission-reduction ambitions.

The record profits that oil and gas majors raked in last year thanks to the price rally in energy commodities prompted governments in the EU and the UK to impose windfall taxes. These were aimed at propping up state finances at a time when economies were struggling to keep going amid soaring energy prices. Yet they also led to warnings from the industry that investment decisions will be affected, and not in a positive way.

European governments, along with their counterparts in the UK and the United States, found themselves in a position where, on the one hand, they had to motivate more oil and gas production but, on the other, had to uphold their commitments to the energy transition.

According to a new report by Wood Mac, this clash of priorities will make for a complicated year in oil and gas in 2023. For starters, the authors noted, some oil and gas companies are already cutting their spending plans because of the windfall taxes. It makes sense for them to do this because governments have given no indication these will be canceled if oil and gas prices fall, which they already have.

Another challenge related to this is getting oil and gas companies to actually increase production in order to enhance energy security. If the U.S. example is anything to go by, oil and gas companies will likely resist calls for reinvestment of profits into more production. The Biden administration has repeatedly called on oil and gas producers to pump more, regardless of the administration’s decarbonization plans, but the industry has not responded favorably.

What it has responded to favorably is the greater demand for natural gas, which has driven higher production of the commodity and, consequently, lower gas prices in the world’s largest producer, which has provided some relief for energy consumers. The relief has been helped by lower European demand for U.S. gas thanks to the warm winter, which has kept gas storage relatively full.

RelatedPosts

GACL Terminates Evatex Revenue Assurance Contract Amid OSP Probe

Cyber Security Authority Flags Rising Mobile Data Scam, Cautions Public

Gov’t Reopens Talks With PayPal to Restore Full Service Access in Ghana

The twist here is that because gas storage is full, European gas buyers will be forced to lower their purchases of U.S. liquefied natural gas for at least part of this year. This means a slower refill season and, likely, continued lower prices. These, in their turn, may lead to a slowdown in U.S. gas production growth, which will tighten supply.

Then there is the whole decarbonization drive, which in no way motivates new oil and gas exploration, even though offshore drilling is on the rise, and strongly. There is simply no way to square governments’ emission ambitions and the long-term security of oil and gas supply. This means that the industry will remain watchful and extremely cautious with investment decisions.

A slowdown in the profit boom will support this sentiment. The FT reported this week that although Big Oil profits for 2022 will be massive, this year may be a bit different because of the price decline. According to estimates by S&P Capital IQ cited in the report, Big Oil’s collective profits this year could come in at $50 billion below last year’s haul, which stood at around $200 billion.

Now, $150 billion would still be quite high as profits go—it would, in fact, be the second-highest net result for Big Oil in history after last year’s record. Yet it will likely continue to fuel share buybacks and dividend increases rather than generosity with new production. That’s especially likely to be the case in the context of expectations that the global economy may slip into a recession this year.

According to Reuters’ John Kemp, the question about global recession is when rather than if. In a recent column, the agency’s market analyst argued that either the economy would slow down because of inflation and recession would result, or central banks would continue with their aggressive approach to said inflation and eventually cause a recession.

Under the first scenario, the recession will begin in the first half of the year and, under the second, it could be delayed to the second half or even early 2024. In such a context, and with windfall taxes in place, the industry is quite justified in taking the cautious path and not jumping at government calls to pump more oil and gas.

Cautiousness may even deepen if, as Wood Mac expects, some governments move to raise dividend taxes and share buyback taxes. And this suggests that the energy security these same governments want to enhance by motivating more oil and gas production will be left to market forces, regardless of the government’s efforts.

Tags: Oil and gas in for turbulent year as governments and industry butt heads
No Result
View All Result

Highlights

Financial Sector Assets up 34.6% in 2024 to GHS 525.59 Billion

Banking Sector Soundness Remains Robust in 2024 Amid Strong Profitability, Adequate Capital Buffers

Sha’Carri Richardson Withdraws from US Trials Following Arrest

From Singuluma to El Kaabi: Can CHAN 2024 Unleash the Next Hat-trick Hero?

Ghana to Welcome King’s Baton Relay on August 8 Ahead of 2026 Commonwealth Games

RMA Demands Public Inquiry into Unibank Collapse, Slams AG’s Decision to Drop Charges

Trending

Features

GACL Terminates Evatex Revenue Assurance Contract Amid OSP Probe

August 2, 2025

GACL Terminates Evatex Revenue Assurance Contract Amid OSP Probe The Ghana Airports Company Limited (GACL) has officially...

Cyber Security Authority Flags Rising Mobile Data Scam, Cautions Public

August 2, 2025

Gov’t Reopens Talks With PayPal to Restore Full Service Access in Ghana

August 2, 2025
Bank of Ghana

Financial Sector Assets up 34.6% in 2024 to GHS 525.59 Billion

August 2, 2025

Banking Sector Soundness Remains Robust in 2024 Amid Strong Profitability, Adequate Capital Buffers

August 2, 2025

Who we are?

NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World

NorvanReports is a unique data, business, and financial portal aimed at providing accurate, impartial reporting of business news on Ghana, Africa, and around the world from a truly independent reporting and analysis point of view.

© 2020 Norvanreports – credible news platform.
L: Hse #4 3rd Okle Link, Baatsonaa – Accra-Ghana T:+233-(0)26 451 1013 E: news@norvanreports.com info@norvanreports.com
All rights reserved we display professionalism at all stages of publications

No Result
View All Result
  • Home
  • Business
    • Agribusiness
    • Aviation
    • Energy
    • Insurance
    • Manufacturing
    • Real Estate
    • Maritime
    • Tourism
    • Transport
    • Banking & Finance
    • Trade
    • Markets
  • Economy
  • Reports
  • Technology
    • Cryptocurrency
    • Cyber-security
    • Social Media
    • Tech-guide
    • Telecom
  • Features
    • Interviews
    • Opinions
  • Lifestyle
    • Entertainment
    • Sports
    • Travel
    • Environment
    • Weather
  • NRTV
    • Audio
    • Video

Welcome Back!

Login to your account below

Forgotten Password?

Create New Account!

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
NORVANREPORTS.COM | Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.