Upstream Oil & Gas Investment Needs 22% Boost By 2030: Report
The International Energy Forum (IEF), in collaboration with S&P Global Commodity Insights, has released a new report stating that to meet the growing demand and address cost inflation, annual upstream oil and gas capital expenditures (Capex) must see a 22 percent increase by 2030. This adjustment translates to a necessity for $4.3 trillion in new investments from 2025 to 2030.
The "Upstream Oil and Gas Investment Outlook" report highlights the critical need for more investments to ensure the stability of energy markets, vital for global economic and social wellbeing. According to Joseph McMonigle, Secretary-General of the IEF, well-supplied and stable energy markets are essential for progress on climate issues, as instability leads to high prices and volatility.
This year, global upstream oil and gas capex is expected to exceed $600 billion for the first time in a decade, an increase of $24 billion from the previous year. To maintain an adequate supply by 2030, an annual investment increase of $135 billion, or 22 percent, to $738 billion is required. Roger Diwan, Vice-President at S&P Global Commodity Insights, emphasized the need for reinvestment of existing cash flows to counter expected production declines and future demand growth.
The report details that over 60 percent of the capex increase up to 2030 will be concentrated in the Americas. Notably, the United States and Canada are pegged as the primary drivers of this growth. Additionally, Latin America, especially Brazil and Guyana, is expected to significantly contribute to non-OPEC supply growth, primarily through conventional crude production expansions.
Despite these projections, the report acknowledges considerable uncertainty around the trajectory of global oil and gas demand and the pace of the energy transition towards net-zero CO2 emissions. Forecasts from leading organizations show a divergence of up to 7 million barrels per day (bpd) by 2030, a gap that expands to 27 million bpd under more ambitious climate scenarios.
The IEF and S&P Global Commodity Insights' report underlines that increased upstream oil and gas capital expenditures not only support energy security but also aid the energy transition. With oil demand set to rise from 103 million bpd in 2023 to nearly 110 million bpd by 2030, the call for heightened investment in new oil and gas supply to meet this growing demand and ensure market stability has never been more critical.
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