BAKU, Azerbaijan, Oct.18
By Leman Zeynalova – Trend:
In the STEPS scenario of the International Energy Agency (IEA), annual upstream oil and gas spending averages around USD 650 billion between 2021 and 2030, and USD 700 billion through to 2050, which is higher than the average investment in the 2010s, Trend reports with reference to the IEA.
Over 60 percent of total investment is spent on developing new fields.
In the APS, investment requirements to develop new fields are reduced markedly. Average annual upstream oil and gas spending between 2021 and 2050 amounts to USD 495 billion, with spending on new fields down by a third compared with the STEPS. In the NZE, demand for oil and gas plummets to levels that do not require new field developments beyond those already approved, although investment in existing fields continues. At USD 235 billion, average annual upstream oil and gas spending between 2021 and 2050 is two-thirds lower than in the STEPS and, with the exception of fields already approved, is entirely spent on existing fields. In this scenario, there is much greater focus on boosting productivity from existing fields and reducing emissions from operations.
The fact that no new oil and natural gas fields are required in the NZE does not mean that limiting investment in new fields will lead to the energy transition outcomes in the NZE. If demand remains at higher levels, reduced investment would result in a shortfall in supply in the years ahead, and this would lead to higher and more volatile prices. Therefore, a strong policy push to reduce oil and gas demand in line with the trajectory envisaged in the NZE is key to achieve deep reductions in emissions and to avoid the risk of market tightening.
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