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Oil & gas investment to switch away from upstream to low carbon efforts in 2022

Oil&Gas Materials 13 December 2021 14:04 (UTC +04:00)
Oil & gas investment to switch away from upstream to low carbon efforts in 2022

BAKU, Azerbaijan, Dec.13

By Leman Zeynalova – Trend:

Oil and gas investment tilts away from upstream to low carbon efforts in 2022, Trend reports with reference to Fitch Solutions.

“Increasingly, publicly-listed firms will ramp up commitments to reduce climate impacts from operations. This will divert capital from traditional upstream investments to low carbon investments. NOCs, however, will continue to support the upstream industry as exploration and production efforts step up to fill the expected gap in IOC investment in the coming years,” reads a report released by Fitch Solutions.

The company’s analysts note that despite an expected 6 percent increase in capital expenditure for 2022, they recognize that an increasing share will be diverted from traditional core upstream activities to new ventures in the wider energy space and carbon mitigation.

“The key categories for absolute growth in capex will be the Middle East, followed by the majors and North America. While we forecast the majors and North America as the regions with the highest growth of 13% and 15%, respectively, increased regulatory and investor pressure will see a larger share of total investment ceded to low carbon business lines. We expect continued growth in fossil fuel production to remain a priority, although most near-term investment will target incremental growth projects and brownfield expansions over more costly long-term greenfield ventures. The shortfall in upstream investment from IOCs will be countered by continued high investment from state-backed NOCs in the Middle East, China and, to a lesser extent, in Latin America,” the report says.

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Follow the author on Twitter: @Lyaman_Zeyn

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