Canada’s Cenovus Energy Inc on Tuesday forecast higher capital expenditure for 2023, as the energy company looks to boost production in response to higher crude prices amid a supply crunch caused by sanctions on Russia.
Global crude prices rose as much as 79% this year as sanctions on major oil exporter Russia over its invasion of Ukraine squeezed already tight supplies.
The European Union will also ban Russian crude imports from Dec. 5 and Russian oil products from Feb. 5, fueling further supply concerns.
The energy producer expects 2023 upstream production of 800,000 barrels of oil equivalent per day (boepd) to 840,000 boepd, a more than 3% year-over-year increase.
Cenovus’ 2023 crude oil throughput is expected to be between 610,000 barrels per day (bpd) and 660,000 bpd, a 28% increase from 2022, with the restart of the Superior Refinery in Wisconsin and the expected additional 50% interest in the Toledo Refinery in Ohio.
Last week, Cenovus’ Canadian rivals Suncor Energy and Canadian Natural Resources also said they expect higher capital expenditure in 2023 compared with current year.
Rising costs and shortages of labor and materials have also plagued the oil and gas industry this year and companies expect the situation to further worsen in 2023.
The Calgary, Alberta-based Cenovus said it anticipates 2023 capital spend to between C$4 billion ($2.94 billion) to C$4.5 billion, higher current year forecast of C$3.3 billion to C$3.7 billion. ($1 = 1.3627 Canadian dollars) (Reporting by Ankit Kumar; Editing by Krishna Chandra Eluri)