US oil major Exxon Mobil Corporation is seeing a need for longer term gas supply growth and is strategizing by working towards growing its portfolio of Liquified Natural Gas, lLNG, opportunities, Goldman Sachs said citing Exxon’s chief executive.
The growth will be seen from its upcoming projects which include Mozambique, Papua New Guinea, Qatar and Golden Pass in the United States, said Darren Woods, chief executive officer of Exxon, at a Goldman Sachs global energy conference, the investment bank said in a note dated January 8.
Woods said each project had idiosyncratic circumstances which will dictate when the projects will be sanctioned, with the key consideration being delivery of project at a low cost of supply and the project’s ability to weather peaks and troughs in the gas supply cycle.
With an annual depletion rate of 5-6 percent across both oil and gas, the long-term investment fundamentals for the industry is looking robust with a need for new supply to come online to continue meeting demand, the note cited Woods as saying.
Even assuming a flat demand, cumulative depletion will drive the need for total oil production needing to be replaced in 15 years and gas production to be replaced in 20 years, he said, adding that the biggest risk seen in the industry was underinvestment.
Growth of global economies, population and improving standards of living will be key drivers of demand for oil products and chemicals, he said.
On consolidation in the Lower 48 or among corporates, Woods said it had hurdles as many of the smaller pure-play exploration and production, E&P companies already operated a very lean structure, where it would be “difficult to extract value” from merger and acquisition M&A premiums paid, according to Goldman.
Goldman said Exxon did not immediately comment on the matter.