Rob Starr, Big4.com Staff Reporter

Asian countries and Australia showed momentum for outbound investments in their attempt to provide security of energy supplies in lieu of increasing domestic energy demand in 2011. Oilfield services sector transactions continued their momentum in this highly fragmented subsector, although the magnitude of deals was relatively smaller. Selective sovereign wealth funds and private equity remained focused on further building up their service portfolios.

However, 1,322 oil and gas transactions were announced in 2011 globally, an increase of more than 5% compared to 1,258 in 2010, proving that this remains one of the most resilient global sectors for mergers and acquisitions.

Sanjeev Gupta, Asia-Pacific Oil & Gas Leader and a Transaction Advisory Services specialist Partner at Ernst & Young made the following comments:

“The oil and gas market has proved that it can adapt to higher levels of uncertainty and keep transacting. The key questions now are how it will cope with the combination of commodity price volatility and structural contraction in global debt capacity.”

“Despite substantial economic worries in the US and Europe, we expect to see more outbound acquisitions – especially for upstream assets – by the Asian players, notably Chinese and other broader Asian NOCs, and for unconventional gas assets. We also expect to see increasing supplies from Iraq and Libya in 2012 to meet the increasing energy demand from Asia-Pacific. We expect continuing portfolio rationalizing and optimization across subsectors, i.e., upstream, downstream and oilfield services and among a mixed set of players (NOCs, oil majors, independents, private equity and service companies). We also expect to see declining focus towards the renewable sector, as the industry will continue to see a rise in shale gas and oil sands production,” he says.

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