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levels in 2016, and resume the growth (Figure 6),
although the levels seen in 2014 will not return in
many years to come.

Figure 5 - New CAPEX investments will be required primarily to maintain the base oil pro-
duction levels
described by the recently fashionable but very cor-
rect soundbites, with the oil and generally energy
prices “lower for longer” as we are entering “a new
normal” (era).
Of course, there is no shortage of unknowns: ge-
opolitics, risk-of-war in key oil
The industry is today in producing geographies, per- Figure 6 - CAPEX investments are expected to resume
“a new normal” era, sistent uncertainties about the gradual growth in 2017
when the oil and generally decisions to be made by va-
energy prices will be rious Governments regarding In 2017 the CAPEX investments should
“lower for longer” – among others – the imple- turn around and grow 7% vs. the lowest
mentation of recent greenhou-
level in 2016
se gases limitation policies,
new discoveries and the rapidly advancing pace
of technological progress, etc., will all have a huge The industry will need more investments to match
impact on future markets and supply/demand ba- the growing needs for energy availability, changing
lances. energy mix, overcoming depletion and replacing
ageing plants. But the industry will invest only in
Gradually recovering new the sectors and projects offering good returns in
this “new normal” situation.
CAPEX investments Indeed, in Figure 7 we see indicative breakeven
costs of new investments talked about today.
According to most industry analysts, in the most Traditional Middle Eastern and Russian producers
likely scenario, therefore, the CAPEX investments from predominantly onshore fields, and offshore
should slowly turn around, after the recent lowest operators in the Gulf of Mexico, Brazil and the

Figure 7 - US tight oil is today the ‘swing producer’

Impiantistica Italiana - Gennaio-Febbraio 2017 23