"Upstream spending to rise to $485bn in 2023"

" Upstream spending to rise to $485bn in 2023 \r\n\r\nOver the past three years, the majority of U.S. energy companies have avoided spending big to expand production in the aftermath of the 2020 oil crisis, prioritizing returning more cash to shareholders in the form of dividends and share buybacks. Most oil and gas companies have only announced small increases in their capital spending for the current year, and also plan to grow production modestly.\r\n\r\nBut this does mean that these companies won\u2019t try to capitalize on oil prices that remain at multi-year highs. In its\u00a0 2023 outlook ,\u00a0 Energy Intelligence \u00a0notes that global upstream capex will hit $485B in the current year, good for 12% Y\/Y increase and a near 30% recovery from the 2020 trough.\r\n\r\nThe energy expert says that spending is unlikely to hit the $700 billion-plus level seen during the 2013-2014 peak in this decade, with most companies preferring to focus on the most advantaged \u201cbarrels\u2019\u2019 i.e. lower cost, lower carbon projects with faster timelines. NOCs, large independents and western majors are returning to advantaged offshore plays including the Guyana Basin, Brazil, Gulf of Mexico, North Sea and West Africa\u2013the regions also expected to drive the lion\u2019s share of non-OPEC growth.\r\n\r\n Oil and Gas Majors Announce Big Capex Hikes \r\n\r\nA number of oil and gas majors have announced bigger-than-average capex hikes for 2023 and beyond. Last month,\u00a0 Chevron Corp. \u00a0(NYSE: CVX) announced that\u00a0 FY 2023 capital spending budget will clock in at $17B , more than 25% from expected spending in 2022 and at the top end of its $15B-$17B medium-term range.\r\n\r\nThe company said that\u00a0upstream capex includes more than $4B for Permian Basin development; ~$2B for other shale and tight assets and ~$2B to go into projects that lower carbon emissions or increase renewable fuels production capacity, more than double the 2022 budget.\r\n\r\nAlthough Chevron\u2019s spending for 2023 will be considerably higher than capital spending in the 2020-21 pandemic years, it\u2019s still much lower than the\u00a0 $30B annual average \u00a0of the 2012-19 period.\r\n\r\n \"Our capex budgets remain in line with prior guidance despite inflation ,\" Chairman and CEO Mike Wirth said.\r\n\r\nChevron\u2019s peer\u00a0 ExxonMobil Corp . (NYSE: XOM) has not announced a drastic increase in spending, but has said that its capital spending for 2023 will be closer to the top end of its annual target of $20B-$25B, a level it expects to maintain through 2027.\r\n\r\nExxon says that more than 70% of its capital investments will be deployed in the U.S. Permian Basin, Guyana, Brazil and LNG projects across the globe. These investments will help increase the company's upstream production by 500K boe\/day to 4.2M boe\/day by 2027. Exxon also unveiled plans to boost spending on lower emission projects by 15% through 2027 to ~$17B through 2027. Exxon also plans to\u00a0 expand its stock buyback plan to $50B \u00a0through 2024, including $15B in 2022 So, where will all that money come from? Exxon expects to \" double earnings and cash flow potential \" by 2027 compared to 2019, and also expects to deliver ~$9B in structural cost savings by year-end 2023 from 2019 levels.\r\n\r\nMeanwhile, Canada's third-largest crude oil and natural gas producer\u00a0 Cenovus Energy \u00a0(NYSE: CVE) has announced that it \u00a0expects to spend C$4B-C$4.5B in FY 2023 , higher than estimates of C$3.3B-C$3.7B for 2022, including ~C$2.8B of sustaining capital for maintaining base production and support operations. Cenovus says it expects to direct C$1.2B-C$1.7B towards optimization and growth, including construction of the West White Rose project in Atlantic Canada. Cenovus has also guided for production of 800K-840K boe\/day in the current year, an increase of more than 3% Y\/Y, including oil sands production of 582K-642K boe\/day and conventional output of 125K-140K boe\/day. Meanwhile, the company expects total downstream crude throughput to clock in at 610K-660K bbl\/day, up nearly 28% Y\/Y.\r\n\r\nBack in June,\u00a0 Saudi Aramco \u00a0revealed plans to keep raising capital expenditure until the mid-2020s as part of its strategy to grow oil production capacity to 12.3 million barrels per day by 2025 and to 13 million b\/d by 2027. To support production growth, Aramco plans to allocate capex by up to $50 billion, which will then increase from 2023 until 2025.\r\n\r\nBrazil\u2019s oil and gas supermajor \u00a0Petr\u00f3leo Brasileiro S.A. or Petrobras\u00a0 (NYSE: PBR) has announced that it will increase 2023-2027 investments by about 15% to $78 billion over the company\u2019s 2022-2026 projected spending. Of the $78 billion planned for capex, 83% or $64 billion is earmarked for E&P activities while 67% of the E&P capex budget will go to pre-salt activities. The company also plans to boost spending to reduce carbon emissions to ~6% of the total compared with 4% in the previous plan, and will see its\u00a0 decarbonization fund\u00a0 more than double the current $248M.\r\n\r\nMeanwhile, Brazilian mining giant\u00a0 Vale S.A.\u00a0 (NYSE: VALE) has announced plans to increase capex\u00a0 to US$6bn in 2023 from US$5.5bn in 2022 while exploration expenses are expected to reach US$350mn in 2026 compared to $180 million for 2022. Vale says it expects iron production to only increase slightly to 320 million tonnes in 2023 compared to 310 million tonnes in the current year, but expects production to exceed 360 million tonnes by 2030. Meanwhile, copper production is expected to jump to 335K-370K tons in 2023 from ~260K tons this year while nickel production is expected to exceed 300K tonnes from ~180K tons in 2022."

"Upstream spending to rise to $485bn in 2023"

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