BAKU, Azerbaijan, June 5. Meeting the world's rising demand for oil and gas will require a significant increase in annual capital expenditures in the upstream sector, says a new report prepared by the International Energy Forum (IEF) and S&P Global Commodity Insights, Trend reports.
The study highlights the necessity for a 22-percent rise in investments by 2030 to ensure adequate supply amidst growing demand and cost inflation.
As such, the IEF and S&P estimate a total of $4.3 trillion in new investments will be required between 2025 and 2030. This projection stems from an outlook predicting an increase in oil demand from 103 mb/d in 2023 to nearly 110 mb/d by 2030.
The report indicates that global spending on upstream oil and gas projects is set to increase by $24 billion this year, reaching over $600 billion - a milestone not seen in a decade. To meet future demand adequately, annual investments must further escalate by $135 billion, marking a 22 percent rise, reaching $738 billion by 2030.
The US and Canada are poised to drive the majority of capital expenditure growth until 2030, the study says. However, Latin America's role in non-OPEC supply expansion is gaining prominence, especially in conventional crude production, with significant developments in Brazil and Guyana.
The report highlights considerable uncertainty regarding global oil and gas demand trajectories and the speed of transitioning to net-zero CO2 emissions. Forecasts from leading consensus organizations vary by as much as 7 mb/d for 2030 in base-case scenarios, and this divergence widens to 27 mb/d when factoring in more ambitious climate scenarios.
Nevertheless, increased investment in upstream oil and gas is deemed crucial for both energy security and facilitating the transition to cleaner energy sources, according to the report.