Oil and gas investments around the world are set to increase by $26 billion this year, a four percent increase from last year, as the industry continues its recovery from an unprecedented downturn caused by the Covid-19 pandemic, according to Rystad Energy.
In 2021, global oil and gas investments hit $602 billion, but in 2022 investments will rise to $628 billion, the firm said.
One factor driving this increase is a large 14 percent growth in upstream gas and liquefied natural gas (LNG) investments. Both of these segments are set to be the fastest growing in 222, with investments increasing to $149 billion, up from $131 billion last year. Rystad notes that while this is a significant increase, it still falls short of pre-pandemic levels, with investment levels not expected to surpass 2019 levels of $168 billion until 2024.
“The pervasive spread of the Omicron variant will inevitably lead to restrictions on movement in the first quarter of 2022, capping energy demand and recovery in the major crude-consuming sectors of road transport and aviation. But despite the ongoing disruptions caused by Covid-19, the outlook for the global oil and gas market is promising,” Audun Martinsen, head of energy service research at Rystad Energy said in a statement.
Meanwhile, upstream oil investments are expected to grow to $307 billion in 2022, a seven percent increase from the $287 billion reported in 2021. Midstream and downstream investments, however, will fall by 6.7 percent, reaching $172 billion.
In shale, investments are forecasted to rise 18 percent to $102 billion this year, compared to $86 billion last year, while offshore and conventional onshore investments are both expected to increase seven percent and eight percent respectively.
Rystad warns that major offshore operators could be challenged on their portfolio strategy this year as the energy transition continues apace. In particular, the firm says that for offshore contractors, the energy transition “could be advantageous for wind power developments” after the sector doubled in size to $50 billion last year over 2019 levels.
For offshore oil and gas, however, the picture is less rosy, with Rystad predicting oil demand to likely peak within the next five years and subsequently capping offshore investment to around $180 billion in 2025.
