RIYADH, Saudi Arabia,
June 5, 2024 /PRNewswire/
-- Annual upstream oil and gas capital expenditures will need
to rise by 22 percent by 2030 to ensure adequate supplies due to
growing demand and cost inflation, according to a new report by the
International Energy Forum and S&P Global Commodity
Insights.
A cumulative $4.3 trillion in new
investments will be needed between 2025 and 2030, according to
the "Upstream Oil and Gas Investment Outlook" report published
today. The growing capital expenditure (capex) needs are based on
an outlook that sees demand for oil rising from 103 million barrels
per day (bpd) in 2023 to nearly 110 million bpd by 2030.
"More investment in new oil and gas supply is needed to meet
growing demand and maintain energy market stability, which is the
foundation of global economic and social wellbeing," said
Joseph McMonigle, Secretary General
of the IEF. "Well-supplied and stable energy markets are critical
to making progress on climate, because the alternative is high
prices and volatility, which undermines public support for the
transition as we have seen in the past two years."
The report found that global upstream oil and gas capex is
expected to grow by $24 billion this
year, surpassing $600 billion for the
first time in a decade. Annual investment will need to grow by
another $135 billion, or 22 percent,
to $738 billion by 2030 to ensure
adequate supply, the report says.
Roger Diwan, Vice-President at
S&P Global Commodity Insights, said that "expected production
declines and future demand growth will require re-investing
existing cash flows even as the transition proceeds."
More than 60 percent of the projected increase in upstream capex
between now and 2030 would be focused in the Americas, according to
the report, co-authored by Allyson
Cutright, Senior Energy Market Analyst at the IEF,
Roger Diwan, and Karim Fawaz, Director of the Energy Advisory
Service at S&P Global Commodity Insights.
While the United States and
Canada are expected to be the
largest drivers of capex growth to 2030, Latin America plays an increasingly
significant role in non-OPEC supply growth, particularly for
conventional crude, with large expansions in Brazil and Guyana.
The report noted significant uncertainty around the trajectory
for global oil and gas demand and the pace of the energy transition
to net zero CO2 emissions.
"Base-case forecasts from consensus-leading organizations
diverge by as much as 7 million bpd for 2030 and this gap widens to
27 million bpd when more ambitious climate scenarios are included,"
the report says.
However, increased capital expenditure in upstream oil and gas
supports energy security and the energy transition, the report
says.
"A just, orderly and equitable transition requires a foundation
of energy security," it says. "The past two years have demonstrated
the consequences of 'disorderly' transitions: price shocks,
shortages, disruptions, political backlash, bitter divisions and
conflict."
About the IEF
The International Energy Forum is the world's largest energy
organization, with 73 member countries accounting for 90 percent of
the world's energy market. The IEF is the global home of
energy dialogue promoting energy security, market stability and
transparency. For more information visit www.ief.org.
About S&P Global Commodity Insights
At S&P Global Commodity Insights, our complete view of
global energy and commodity markets enables our customers to make
decisions with conviction and create long-term, sustainable
value.
We're a trusted connector that brings together thought leaders,
market participants, governments, and regulators and we create
solutions that lead to progress. Vital to navigating commodity
markets, our coverage includes oil and gas, power, chemicals,
metals, agriculture, shipping and energy transition.
Platts® products and services, including leading
benchmark price assessments in the physical commodity markets, are
offered through S&P Global Commodity Insights. S&P
Global Commodity Insights maintains clear structural and
operational separation between its price assessment activities and
the other activities carried out by S&P Global Commodity
Insights and the other business divisions of S&P
Global.
S&P Global Commodity Insights is a division of S&P
Global (NYSE: SPGI). S&P Global is the world's foremost
provider of credit ratings, benchmarks, analytics and workflow
solutions in the global capital, commodity and automotive markets.
With every one of our offerings, we help many of the world's
leading organizations navigate the economic landscape so they can
plan for tomorrow, today. For more information visit
https://www.spglobal.com/commodityinsights.
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