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Investments in upstream oil and gas to fall in 2023

Oil&Gas Materials 7 December 2022 14:21 (UTC +04:00)
Investments in upstream oil and gas to fall in 2023
Laman Zeynalova
Laman Zeynalova
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BAKU, Azerbaijan, December 7. The upstream oil and gas sector is expected to see another year of growth in investment for 2023, albeit smaller than the growth in 2022, Trend reports Dec.7 with reference to Fitch Solutions.

“While high prices have encouraged new investment, cost inflation across the sector in the form of higher rig, labour, material and equipment rates have eroded the impact of capital deployed. Government policy and tax incentives will see new investment made across multiple markets as project economics receive a boost from both a higher price outlook and improved fiscal terms. Multiple contradictions in the energy sector investment mix will contribute to continued fossil fuel use as long-term investments will see natural gas, oil and even coal added back into the mix where earlier climate concerns have seen a pause in investment,” the report reads.

Fitch Solutions notes that the risk associated with insufficient energy supply and national interests have seen climate targets take a back seat to energy security with the fossil fuel industry receiving a boost.

“However, efforts to reduce overall energy use and increase the generation from renewables bodes well for European climate targets as we forecast natural gas consumption to contract across the decade. The US and Canada have also undertaken legislative efforts to build in greater renewables capacity and develop a low carbon economy which, in parallel with efforts to boost domestic oil and gas production, should keep the oil and gas investment outlook positive and in line with an elevated price outlook.”

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