Oil Market Snapshot
Brent fell to $82.6/bbl on 16th October month-to-date as OPEC members refrained from production cuts and ICE Brent Futures contango steepened. On account of weaker fundamentals and bearish futures trading, we now forecast average Brent of $102.36/bbl for 2014 and $91.15/bbl for 2015. A potential near-term OPEC decision on production cuts could lead to oil prices above our forecast for 2015; however cuts might not result in lower exports. A prolonged period of low prices would translate swiftly into delayed production of US tight oil and eventually other upstream projects.Europe's Gas Supply Mix - Present & Future
Europe's conventional gas output is declining fast and the gas supply mix will remain dominated by Russian pipeline gas. LNG will be unable to materially offset reliance on pipeline gas in general whilst US LNG to Europe seems an unlikely prospect at the moment. Diversified supply from shale gas in meaningful quantities probably will remain wishful thinking, too. Although yet-to-find EuroMed gas resources are plentiful, the ball is in IOCs' corner to explore and develop them.Europe's Offshore E&P Potential - Economics & Viability
Upstream spending has increased 400% in the last decade, but production has been falling. Demand growth is currently met by unconventionals such as LTO. As declining oil prices and rising costs limit IOCs' spending abilities, exploration cutbacks and more project delays are to be expected. Lower tax and break-even cost areas will attract attention but unconventionals will eat up a large chunk of investment capital. The Mediterranean E&P horizon is uncertain until Europe becomes more competitive.
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