Mr Lomnitzer also highlights the potentially huge opportunities to be found in US oil shale gas, “where strong production growth comes from the application of modern drilling and well completion technology to known reserves”.
Poppy Allonby, co-manager of the £97.7m BlackRock New Energy investment trust and the offshore £1.9bn BlackRock Global Funds World Energy fund, says it is a challenge to find companies “that have the right assets and can invest in them for high returns, or that can add value by returning cash to shareholders”.
Rather than more risky exploration and production-type stocks, Ms Allonby is looking to the service industry, which is proving a good driver of returns by satisfying the increasing demand for infrastructure and pipelines.
One such company is TransCanada, which builds new pipes in the US to bring Canadian crude oil into the US, removing bottlenecks in the supply line.
The elephant in the room for the oil & gas sector has always been that the Opec countries control 60 per cent of the oil fields in the world in nationalised industries that cannot be accessed by investors.
However, Mr Hulf believes the Opec countries will eventually bring in the western oil majors to help them, because they do not have the technology or expertise to extract oil efficiently themselves.
He concludes: “They are starting to talk more closely with people like Exxon, Shell and Chevron, so investors should keep an eye on those companies that have those sorts of links with the Opec countries.”
Matthew Jeynes is senior reporter at Investment Adviser
