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Global and Regional Markets

Pressures mount as industry goes deep into survival mode

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The upstream oil and gas industry has gone into survival mode, and analysts appear to agree that things are going to get worse before they get better. With low and volatile oil prices leading to more and more postponed drilling projects and lower and lower rig counts, operators, drilling contractors and service companies alike are cutting costs wherever possible. However, it’s the drilling contractors and service companies that have bore the brunt of these reductions, and analysts are urging the industry to increase collaboration to reduce costs in a balanced manner.

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Despite challenges, lure of Latin America too strong to ignore

Despite the abundance of potential resources in Latin America, the region has not been immune to the global market downturn. EIA data shows that onshore and offshore rig counts combined have fallen from 398 a year ago to 314 in June. In Brazil specifically, the offshore rig count has fallen from 84 in July 2013 to 52 in July 2015. Argentina has been more stable than some of its neighbors – its rig count has only decreased by two, from 107 to 105, according to EIA data.

In 2014, an investigation by the Brazilian federal police, dubbed Operation Car Wash, raised suspicions that several politically appointed Petrobras executives had been accepting bribes in exchange for offering construction and engineering companies inflated contracts. Portions of these ill-gotten gains were allegedly paid to politicians and their political campaigns.

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