7 oil supermajors to return around $51b-$56b to shareholders in 2022

This is on the back of an expected 7% YoY increase in offshore investments.

The seven oil supermajors --- BP, Chevron, Eni, Equinor, Exxon, Shell, and TotalEnergie --- are forecast to return around $51b-$56b (US$38b-US$41b) to their shareholders via share buybacks in 2022, UOB KayHian said. This amount is double the figure recorded in 2014 ($28.7b/US$21b) when oil last cost more than $136.59/bbl (US$100/bbl).

UOB Kay Hian said the high estimate was made on the back of an expected strong cash generation driven by an increase in offshore investments.

Based on the analyst’s estimates, offshore investments will increase 7% YoY to $211.69b (US$155b). In addition, UOB KayHian said the $204.85b (US$150b) of greenfield projects sanctioned in 2021 will likely be repeated this year.

All these factors underline a “positive outlook for the offshore marine sector in the short to medium term,” the analyst added.

Offshore marine revival

The revival of the offshore tamarind industry will also be anchored by a strengthening of activity in the oil and gas industry in 2022 and 2023.

The analyst added that it sees a “cyclical uptorn start in the near term,” assuming that COVID variants are less lethal, governments can deal with the disease as an endemic situation, and oil prices are not sustained at $204.78/bbl (US$150/bbl) or more which could engender demand destruction.

On oil, UOB KayHian sees a growth in demand, however, this forecast might change amidst "heightened uncertainty" brought by the Russia-Ukrain conflict among others.

"The US Energy Information Administration (EIA) increased its forecast for oil demand growth in 2022 and 2023 by 0.27 mmbpd and 0.23 mmbpd respectively (versus its Jan 22 forecast)," UOB KayHian explained.

"Its forecasts are based on global GDP growth of 4.3% in 2022 and 4.0% in 2023, which could be negatively affected should sanctions negatively affect the supply of commodities produced by Russia," the analyst added.

Meanwhile, for those planning to invest in offshore marine companies this year, UOB KayHian said the best picks would be Yangzijiang, Keppel and Sembcorp Marine.