A new warning on oil investment
A new report concludes that global spending on oil-and-gas exploration and production needs to increase greatly in coming years to ensure adequate supplies, even as demand growth slows.
Driving the news: The Saudi Arabia-based International Energy Forum and the consultancy IHS Markit say investment should reach nearly $525 billion in 2030 to enable market balance.
The big picture: "Cumulatively, we see the need for $4.7 trillion of upstream capex over 2021-2030 to meet market needs and prevent a supply shortfall, even if demand growth slows toward a plateau," they conclude.
- "The next two years...are critical for sanctioning and allocating capital toward new projects to ensure adequate oil and gas supply comes online within the next 5-6 years."
The intrigue: The amount of new development needed depends on the trajectory of climate policy.
- An International Energy Agency analysis of pathways to net-zero emissions in 2050 finds that with policies enabling aggressive movement away from fossil fuels, no new oil-and-gas fields need approval.
- Under their net-zero pathway, the average annual upstream investment in 2021-2030 would be around $365 billion annually, with the bulk in existing fields but some in new fields that were already approved.
Yes, but: Nations' current clean energy and climate policies are nowhere in the universe of what would enable that net-zero pathway.
- Under current policies and announced policy scenarios, IEA also envisions vastly larger investment, including in new fields.