Emmanuel Addeh in Abuja
Despite challenges currently faced by the global oil and gas industry, investments in the sector globally was set to increase by $26 billion this year, a 4 per cent rise from last year, according to a Rystad Energy report.
The independent energy research and business intelligence company, which provides data, tools, analytics and consultancy services for the industry, estimated in the report that the sector would continue its recovery from an unprecedented downturn caused by the Covid-19 pandemic in 2020.
In 2021, global oil and gas investments hit $602 billion, but in 2022 investments would rise to $628 billion, the firm predicted.
According to Rystad, one factor driving this increase was a large 14 per cent growth in upstream gas and Liquefied Natural Gas (LNG) investments.
“Both of these segments are set to be the fastest growing in 2022, with investments increasing to $149 billion, up from $131 billion last year,” it stated.
The firm stated that while this was 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,” Head of Energy Service Research at Rystad Energy, Audun Martinsen, said.
In addition, it stated that upstream oil investments were expected to grow to $307 billion in 2022, a seven per cent increase from the $287 billion reported in 2021 saying that midstream and downstream investments, however, will fall by 6.7 per cent, reaching $172 billion.
“In shale, investments are forecasted to rise 18 per cent to $102 billion this year, compared to $86 billion last year, while offshore and conventional onshore investments are both expected to increase 7 per cent and 8 per cent respectively,” it explained.
But Rystad warned that major offshore operators could be challenged on their portfolio strategy this year as the energy transition continues apace.
In particular, the firm stated 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 was 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.