Annual upstream oil and gas capital expenditures will need to rise by 22% by 2030 to ensure adequate supplies due to growing demand and cost inflation, according to a new report “Upstream Oil and Gas Investment Outlook” by the International Energy Forum (IEF) and S&P Global Commodity Insights.
A cumulative $4.3 trillion will be needed between 2025 and 2030, even as demand growth slows toward a plateau. Annual upstream investment will need to increase by $135 billion to a total of $738 billion by 2030 to ensure adequate supplies. This estimate for 2030 is 15% higher than the IEF assessed a year ago and 41% higher than assessed two years ago due primarily to rising costs and a stronger demand outlook. “More investment in new oil and gas supply is needed to meet growing demand and maintain energy market stability, which is the foundation of global economic and social wellbeing,” said Joseph McMonigle, Secretary General of the IEF. “Well-supplied and stable energy markets are critical to making progress on climate, because the alternative is high prices and volatility, which undermines public support for the transition as we have seen in the past two years.”
The report found that global upstream oil and gas capex is expected to grow by $24 billion this year, surpassing $600 billion for the first time in a decade. Annual investment will need to grow by another $135 billion, or 22%, to $738 billion by 2030 to ensure adequate supply, the report says. Roger Diwan, Vice-President at S&P Global Commodity Insights, said that “expected production declines and future demand growth will require re-investing existing cash flows even as the transition proceeds.”
More than 60 percent of the projected increase in upstream capex between now and 2030 would be focused in the Americas, according to the report. While the United States and Canada are expected to be the largest drivers of capex growth to 2030, Latin America plays an increasingly significant role in non-OPEC supply growth, particularly for conventional crude, with large expansions in Brazil and Guyana.
The International Energy Forum is the world’s largest international organization of energy ministers from 72 countries and includes both producing and consuming nations.
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