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While revenue backlogs have dried up

Question 2. Will the next wave of LNG and debt has matured, operating costs have export projects get the go ahead? remained, leaving the industry with a cash de? cit of almost US$6 billion by the end of 2015.

The opening of LNG exports

Despite steps to cut planned capital ex-

DRILLING in 2016 will see a surge in penditure, this net cash position looks set to supply from the US. remain negative as operating costs remain high and contracted revenue projections continue to decline. (Further ? nancial analy- sis of the current market can be found in

Energy Insights’ Offshore Drilling Corporate

Performance Analysis Report).

The industry isn’t sitting idly by as rev- enues are decimated – mindful of their lim- $9-10 $6-8 mmbtu mmbtu ited control over future revenue, rig owners

Longer-term projects will only be viable if Prices currently sit at around $6-8 are cutting costs, renegotiating contracts and a gas price of $9-10 mmbtu is achieved. mmbtu as a result of low-oil prices. using short-term bankruptcy to restructure their debts.

More innovative operational cost cutting

Question 3. What impact will the Middle

East have on the global gas market? measures include minimizing manning levels, moving rigs out of oversupplied re-

Though the Middle East currently holds 43% of global gas reserves, gions, cluster-stacking ? eets and embracing it has only been accountable for 16% of total trade ?ows. partnership as a route to improving project management.

Meanwhile overheads are being cut via re- ductions in wages, dividends and corporate expenses, the retirement of non-performing 16% of total functions, and consolidation of corporate trade ?ows premises.

If there’s any positive to be taken from the current market conditions, it’s that rig own- 43% of global ers have been forced to embrace a more agile, gas collaborative, streamlined way of working.

It should position them well to bene? t from these tough decisions as and when the upturn does arrive.

Two potential game changers:

Ryan Peacock, based in

Houston, works at

Zohr

McKinsey Energy

Insights as an oil? eld

Egypt service manager support- ing clients in market due

The warming of relations with Iran

The discovery of the 850 bcm diligence, market which holds 18% of the world’s natural super-giant gas ?eld at Zohr in Egypt gas reserves on its own forecasting and analysis.

He was previously an engagement manager for McKinsey and Company. Peacock holds a

Question 4. What role will oil prices

PhD in chemical engineering from Stanford play in determining the future for gas?

University.

If oil prices remain low, the global gas market will be impacted in three ways

William Wu, based in

London, works for

New facilities won’t

McKinsey Energy achieve FID approval

Insights as an ana-

The world will be lyst.