Full Title: Oil and Gas Investment Outlook: Investment Crisis Threatens Energy Security
Author(s): International Energy Forum, IHS Markit
Publisher(s): International Energy Forum, IHS Markit
Publication Date: December 9, 2021
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Description (excerpt):
Oil and gas upstream investment will need to increase and be sustained at near pre-COVID levels of $525 billion through 2030 to ensure market balance despite slowing demand growth. Upstream investment in the oil and gas sector in 2021 was depressed for a second consecutive year at $341 billion – nearly 25% below 2019 levels. Meanwhile, oil and gas demand is now near pre-pandemic highs and will continue to rise for the next several years, particularly in developing countries.
The investment environment for the oil and gas sector is becoming more challenging in the face of unprecedented uncertainty and risks, including record price volatility, evolving government regulations, increasingly diverging long-term demand narratives, and non-standardized ESG criteria. The lower-price cycle of the past six years and long-term demand debates have driven up investment hurdles and the cost of capital for long-cycle oil projects. This is fostering an environment of “pre-emptive underinvestment” for oil and gas supply, where investments are lagging robust demand.