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Five Industry Predictions For 2023

Here are a few oil & gas industry predictions for 2023. Please note that unexpected events could forestall some of the events that currently seem likely.

Other Countries will follow US lead in Policy Support for Low-Carbon Energy

The extended and expanded tax credits and subsidies offered to low-carbon energy in the US Inflation Reduction Act, signed into law in August, has caused companies around the world to reconsider investment decisions. Key measures in the act, including support for wind and solar power, battery storage, carbon capture, and low-carbon hydrogen, simply outshine existing policy frameworks in most other countries.

To remain competitive, those countries will have to introduce incentives that are closer in value to what is now available in the US. A leveling-up of policy support will unlock new business opportunities for the entire globe.

World Oil Demand Will bounce back

As 2022 ends, global oil demand is faltering. For the fourth quarter of 2022, we expect a sharp decline in demand of 1.2 million barrels per day year-on-year. However, we think this downward trend will turn out to be short-lived. We are forecasting a brisk return to oil demand growth next year, with an increase of 2.3 million barrels per day for 2023. This resumption of the upward trend in demand is likely to jolt the oil market out of its current doldrums and support prices. 

CCUS will go Mainstream and become a Big Investment Decision

After a flurry of announcements recently, companies will finally kick off major projects in carbon capture utilization and storage (CCUS) in 2023.  We are particularly watching for hub projects – those that provide the infrastructure for multiple emitters to transport, and store captured carbon dioxide at scale. Up to 30 CCUS hubs around the globe are targeting FID in 2023, and about half of those are likely to go ahead. 

At Least one Larger Independent Shale Company will Break Ranks

Oilfield services constraints and project execution challenges remain obstacles to faster growth. Shareholder returns take priority. But it is not a completely level playing field. Some companies have better balance sheets, better assets, and more established frameworks for returning capital. We think 2023 could very well be a year where the best of the best break out, and decide to grow more aggressively than many stakeholders currently expect.

Fortune will Favor the Bold in Oil and Gas FIDs

The list of large oil and gas projects nearing Final Investment Decisions has been more than twice the number getting the go-ahead since 2020. Capital discipline, and inflation and execution concerns have complicated decision-making for companies evaluating major projects. Continuing tensions between service companies and operators will keep pouring sand into the cogs of the stage gate process for investment decisions. Operators are nervous about cost certainty and service providers are looking to expand margins. Of about 60 large projects that could be ready to go, we think only about 30 will proceed in 2023. 

Reach Out to Tiger General

We hope you found our predictions for 2023 interesting. If you need a new piece of equipment, fill out the Tiger General Truck Inquiry Form today!