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OPEC upstream investments to rise in 2017–2025

Oil&Gas Materials 8 November 2017 12:23 (UTC +04:00)

Baku, Azerbaijan, Nov.8

By Leman Zeynalova – Trend:

Upstream investments by OPEC member states will continue to rise during the period of 2017-2025, according to the cartel’s World Oil Outlook (WOO).

OPEC countries will continue to invest in order to ensure a reliable, stable and well-supplied oil market, said the report.

“In the 2017–2025 period, member countries are forecast to spend an annual average of $50 billion and then $75 billion in the longer-term, as demand for OPEC crude is projected to rise sharply after US tight oil peaks in the mid-2020s,” said the cartel.

The report says that over the entire forecast period of 2017–2040, most of the investment will need to be made in non-OPEC countries, with a required $292 billion projected for every year in the 2017–2025 period, and $245 billion in the subsequent years until 2040.

The bulk of the necessary spending will be in OECD (Organization of Economic Co-operation and Development) countries, as a result of higher anticipated cost per additional barrel and higher average rates of natural decline – both in some part due to the relative maturity of the region’s oil fields, OPEC believes.

“Can these investment needs be met? With preliminary indications for 2017 spending already more or less in line with projected requirements, the WOO 2017 remains optimistic that this goal is achievable. While future investment needs are relatively high in the historical context, they are well below the peaks reached in 2012–2014, at a time of extreme cost inflation (and much higher crude oil prices),” said the report.

Overall, in the period up to 2040 the required global investment in the oil sector is estimated at around $10.5 trillion, according to OPEC forecasts. This includes also the required investment in the downstream sector estimated at $1.5 trillion and in the midstream sector at $1.1 trillion.

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