KUALA LUMPUR: Capital expenditure (capex) spending in oil fields is expected to rise by 6%–7% annually to US$500 billion (RM1.65 trillion) worldwide this year, a shade lower than the record set in 2008, and this figure is likely to breach 2008's highs in the near future, an economist said.

Will Rowley, an economic analyst with United Kingdom's Acteon Group Ltd, said the estimates were based on the assumption that oil prices stayed at "comfortable" levels for expansion and reinvestment.

Acteon provides services like engineering and electronic expertise to the subsea structural builders. Subsea is anywhere from the surface of the sea to the seabed.

Speaking to reporters after delivering his opening keynote presentation at Offshore Asia 2010 here on Wednesday, March 17, Rowley said Asia was well positioned to tap into this expected area of growth.

He said in the next five years, Asia would maintain its number one market share in terms of volume in the fixed platforms sector and would be the fastest growing in the world from being fourth in volume presently in the "subsea tree" sector.

Rowley said Asia's market share in the floating production sector would be maintained at second place to Brazil and would rise to second place from fourth in terms of volume presently in the platform removals sector. He said the industry would see structural changes that would lead to more deepwater exploration and subsea activity and in more diverse geographical areas. For example, he said many national oil majors were now expanding to exploring in areas beyond their country's borders.

Rowley added that there would be increasing exploration works in the offshore sector as oil onshore became less available.

He said drilling activities, which went down in 2009, due to the global recession and plunging oil prices, would resume on its upward trend again in the years ahead on the back of rising demand for the commodity.

This was also due to the reducing relative volatility of oil prices which would give majors and commercial operators the comfort to make the decision to expand and reinvest in more exploration activities, Rowley said.

His presentation showed the "comfort zone" for the oil majors and commercial operators to decide to expand and reinvest in the sector at the US$40–US$73 per barrel, citing statistics from Norway-based bank and researcher DnB Nor.

"Oil is a finite resource. Growing demand will push oil prices higher, but as oil prices move higher, it will be used for different things. This means that its overall use will probably decline over time because it becomes too expensive to use it for a certain purpose."

"If you took today's demand for oil and state that it is going to stay there forever, then theoretically the world will run out of oil. But that's not how the world works. As it becomes more expensive and harder to get, people would then worry about the availability of the resource.

"Then you wouldn't use it for running power stations, you would use for things that are more profitable," Rowley said.

"Renewable energy and hydrocarbons' role (for energy production) would sit side by side for decades to come."