The independent energy research and business intelligence company Rystad Energy is predicting a robust performance from the global oil and gas industry, to the continually looming threat of the still rampant Covid-19 pandemic and its variants.
At the beginning of January the company asserted that global investments in the oil and gas sector will grow by US$26 billion this year to US$628 billion. Last year, global oil and gas investments reached US$602 billion.
Rystad says that this year will see the continuation of the industry’s recovery from the 2021’s Covid-19-driven downturn. The company says that the increase in investments in the sector this year can be attributed in large measure to growth of around 14% in upstream gas and liquefied natural gas (LNG) investments. It says that these segments are set to be the fastest growing across the industry this year, with investments set to go to as much as US$149 billion, up from US$131 billion last year. This increase, the company says, however, still falls below pre-pandemic levels, not least the US$168 billion in 2019.
Such concerns as exist regarding the performance of the sector this year revolve largely around views that “the pervasive spread of the Omicron variant will inevitably lead to restrictions on movement in the first quarter of 2022, capping energy demand and recovery in the major crude-consuming sectors of road transport and aviation,” Rystad says. This consideration notwithstanding, the company says, “the global oil and gas market is promising,” its Head of Energy Service Research Audun Martinsen says.
Rystad projects that upstream oil investments are expected to grow to US$307 billion in 2022, a seven percent increase from the US$287 billion reported in 2021. Midstream and downstream investments, however, will fall by 6.7 percent, reaching US$172 billion.
In its report Rystad warns, however, that the heavy hitters among offshore operators could face challenges to their portfolio strategies this year even as the global energy transition looms larger. The transition, it says, “could be advantageous for wind power developments”.
Rystad is predicting that oil demand could peak within the next five years, a development that could cap offshore investment to around US$180 billion in 2025.
