A slump in North American natural gas prices has led to higher-than-expected spending cuts by oil and gas producers this year, Barclays Capital analysts said Monday.

Global spending by exploration and production (E&P) companies is anticipated to decline by 15% in 2009 from a year ago, the semi-annual Barclays survey of 402 producers reported. In December producers told Barclays they would cut E&P spending by 12% this year, said analysts James Crandell and James West.

Worldwide producers have delayed or canceled projects as commodity prices tumbled from their highs at mid-year 2008. However, the drop in gas prices appears to have had the biggest impact in North America, according to Barclays.

In the United States E&P spending now is projected to fall 38% from a year ago to $67.8 billion, which is 12% higher than the Barclays survey reported in December. The drop-off in U.S. exploration spending would be the highest since a 40% reduction in 1986, when oil fell below $10/bbl, the analysts noted.

Spending by E&Ps in Canada now is expected to plunge 36% to $19 billion, well below the $30 billion spent in 2008. Producers surveyed in December had forecast a 23% average cut to E&P spending, Barclays noted.

Notably, two U.S.-based producers, ExxonMobil Corp. and Chevron Corp., expect 2009 spending to eclipse their spending in 2008. However, most of the two companies’ increased spending is slated for overseas projects.

In Russia oil and gas spending in 2009 is forecast to fall by 30% from a year ago, and in the Middle East and Africa producers said they would cut spending on average by 9% from last year. Venezuela’s E&P spending is projected to drop 36%, and overall spending by Latin American producers is forecast to fall on average by 10% from 2008. European E&Ps are projected to spend around 11% less than a year ago.

For now E&P spending forecasts for 2010 are a bit brighter, the survey indicated. More than half of the produces surveyed worldwide said they expect to increase their budgets for next year by 20% or more compared with 2009 levels. Another 21% expect to increase E&P spending by 1-20%.

©Copyright 2009Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.