We see a strengthening in upstream operating expenditure – with opportunities for Petrofac.
In our reimbursable business, we have seen significant recent decreases in upstream operating expenditures. In Europe the recent spending peak was reached in 2013 and in the Middle East it was in 2014, with subsequent falls driven by deflation in the supply chain and decreasing activity levels.
A return to modest growth was reached in 2017, and the trend continued in 2018, with a 5% increase in Europe and a 4% gain in the Middle East5. As shown by the chart below, global operating expenditure is expected to continue to grow for each of the next few years.
We secured many new awards and contract extensions in 2018. With new operating models among operators, and the progressive deployment of new digital technologies, we expect to continue to evolve our service offering.
5 IHS Markit Global Upstream Spending Report, December 2018
Our strategic priorities are to focus on our core, deliver organic growth and reduce capital intensity.