BAKU, Azerbaijan, June 7. The International Energy Agency (IEA) forecasts a 7-percent increase in upstream oil and gas investment for 2024, reaching $570 billion, following a 9-percent rise in 2023, Trend reports.
According to the agency's research, this growth is primarily driven by National Oil Companies (NOCs) in the Middle East and Asia, which have boosted their investments by over 50 percent since 2017 and account for nearly the entire increase in spending for 2023-2024.
Lower cost inflation means that the headline rise in spending translates to a significant 25-percent increase in activity compared to 2022. Investment in existing fields makes up around 40 percent of total upstream spending, with 33 percent allocated to new fields and exploration, and the remainder going to tight oil and shale gas.
At the same time, in 2022-2023, the substantial cash flows into the oil and gas industry were largely returned to shareholders, used for share buybacks, or to pay down debt, with these uses surpassing capital expenditures again in 2023, the IEA noted. The surge in profits has also triggered a wave of mergers and acquisitions (M&A), particularly among US shale companies, which accounted for 75 percent of M&A activity in 2023.
Meanwhile, clean energy spending by oil and gas companies grew to approximately USD 30 billion in 2023, with only USD 1.5 billion coming from NOCs. However, this still represents less than 4% of global capital investment in clean energy.