OIL AND GAS: Energy giants paint bleak picture of market revival

July 31, 2009 -- Large oil and natural gas companies are ditching hopes that demand for energy will pick back up any time soon.

Natural gas prices have remained steady in recent quarters, while the moderate gains in crude prices have been stifled by the global recession.

Energy companies now say they are hunkering down by chopping costs and delaying investments in new developments until the world regains its energy appetite.

"The industry, after going from almost $150 to $30 [a barrel] and back to the mid-$60s, is completely looking at every single aspect of their business," said Martin Molyneaux, managing director of institutional research for FirstEnergy Capital Corp. "It's a rejustification of what you're doing, why you're doing it and how you're doing it."

Royal Dutch Shell PLC said it now expects global oil demand to decline by more than 2 million barrels a day this year, breaking the trend of an average annual increase of a million barrels a day since 2000, CEO Peter Voser said.

Shell said it plans to cut capital spending by about 10 percent and to make additional job cuts (Nathan VanderKlippe, Toronto Globe and Mail, July 30).

But despite falling profits, not all companies are halting spending on new projects. Exxon Mobil Corp. officials said ongoing investments in 120 new projects would help it muscle its way through the economic downturn and would cause no major job cuts (Tom Fowler, Houston Chronicle, July 30).