?Total global capital expenditures by upstream oil and gas companies will fall 17% in 2009 from the year previous, with the majority of cuts in North America. This is according to Tristone Capital Ltd.’s first Global Capital Expenditure Survey identifying challenges and strategic issues affecting spending by upstream oil and gas companies.

Based on the 205-company survey, Tristone expects 2009 total global capital expenditures to fall 17% from 2008, with the majority of cuts seen in North America.

“We believe further reductions are likely, as the largest companies have not yet materially reduced spending, and budgets are based on price forecasts 8% above the 2009 strip for oil and nearly 30% for natural gas. Based on historical analysis, spending by the largest companies could fall dramatically as project sanctioning is delayed into 2010 if the macro environment remains weak,” according to London-based authors Peter Nicol, managing director of institutional research, and his associate, Laura Loppacher,

The survey found that the median spend is falling by 33%. The firms that spent more than $10 billion in 2008 are keeping their spending relatively steady so far in 2009 (only down by 2%), while the companies that spent less than $10 billion report budget cuts of some 30%.

“We believe this is because the largest companies have the financial ability to continue to spend on multiyear projects already under development and have less flexibility to cut spending on committed projects.”

If commodity and capital markets remain weak, additional cuts will be necessary due to the impact on cash flow and lack of available external financing, according to the survey. Participants’ average budgets are based on 2009 oil-strip prices plus 8% and gas-strip prices plus 2%.

Meanwhile, despite a fall in average WTI from $99.76 per barrel in 2008 to $52 per barrel in 2009, based on current price strips, the “Five Sisters” (BP, Chevron, ExxonMobil, Royal Dutch Shell and Total) forecast a hike in upstream capex of 6% in 2009.

Global spending rose to $416 billion in 2008, up from $320.9 billion in 2007, but is expected to fall to $347.1 billion in 2009. In particular, U.S. spending rose 33%, to $103.1 billion in 2008, but is expected to decrease by some 30% to $72.6 billion this year.

Elsewhere, spending in Canada will drop from $51.6 billion in 2008 to $33.2 billion, and international spending will decline from $260.4 billion in 2008 to $241.5 billion.

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