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June 18 (Reuters) - Oil and gas companies will increase exploration and production (E&P) spending by 6 percent to $712 billion this year, despite a slight pullback in spending by industry majors, Barclays said.
Spending by major oil companies is expected to remain flat this year, Barclays said in a report on Wednesday. The bank earlier said it had expected spending to rise by nearly 3 percent.
The big oil companies, Exxon Mobil Corp, Chevron Corp, Royal Dutch Shell Plc, Total SA and BP Plc, are under pressure from investors to keep a tight lid on spending after years of record spending on major projects.
Barclays said it expected smaller, independent oil and gas companies to drive spending growth in North America, where capital budgets were expected to rise 8.4 percent this year, higher than the 7.3 percent it forecast earlier.
There is potential for higher capital deployment in the United States due to geopolitical risks in other oil-producing countries, particularly Iraq, Barclays said.
“I think the first place they are going to put that money into is North America,” Barclays analyst James West told reporters on a conference call.
If conditions in Iraq deteriorate further large Western oil companies like Exxon Mobil Corp may contemplate reallocating dollars to more stable regions like the United States, he said.
Some oil companies are pulling staff from Iraq, fearing violence could spread to major oilfields concentrated in the south as Sunni militants push forward in northern Iraq.
Worries about oil exports from the key producer pushed up the price of Brent crude to $114 a barrel on Wednesday while West Texas Intermediate traded in New York was down slightly at $106 a barrel.
The higher oil prices are expected to boost cash flow for independent exploration and production companies, a factor that may push North American spending even higher, said Barclays analyst James West.
The bank's report, titled "Global 2014 E&P Spending Update," is based on a survey of more than 300 oil and gas companies last month. (bit.ly/T6Ge6C)
Barclays said it also expected higher spending in Africa and Asia this year, but lower capital budgets in Europe and Latin America would limit the overall increase.
E&P companies are basing their spending budgets for the year on oil prices at $101 per barrel for Brent and $91 per barrel for West Texas Intermediate, and a benchmark U.S. natural gas price of $4.12 per British thermal unit, well below current prices, Barclays said. (Reporting by Swetha Gopinath in Bangalore and Anna Driver in Houston; Editing by Kirti Pandey and Sofina Mirza-Reid)