Oil&gas

Experts Advocate For Renewable Energy As Investments In Oil & Gas Up 39% To $499bn In 2022

Posted by: Quickresponse | March 9, 2023

By Ugiagbe Owen David

Experts in the oil and gas industry have advocated for transition to renewable energy sources even as
global investment in oil and gas went up 39 per cent to $499 billion in 2022.

Analysts say, it is the highest since 2014, as well as a historic year-on-year (YoY) high.

This was made known by a report of the International Energy Forum and S&P Global Commodity Insights.

According to the report, higher costs majorly drove the increase in investment. This is as the global rig count was up 22 per cent from a year ago but remained 10 per cent below 2019 levels.

Local analyst however ventured that Nigeria may not have benefited much as it is yet to start implementation of its oil and gas reforms.

However, it was revealed that annual upstream investment would need to increase from $499 billion in 2022 to $640 billion in 2030 to ensure adequate supplies. The estimate for 2030 was 18 per cent higher than the assessment done a year ago. The increase was due to rising costs.

The report also said that Oil and gas exploration and production were experiencing record profits, however, they prioritised returns to shareholders, share buybacks, and debt repayment.

According to the report, â€œnear-term economic headwinds weigh heavily on markets and investors. If the world enters a recession in 2023, depending on the duration and depth, it is possible that oil demand growth could remain below the trend in the next couple of years, potentially extending the post-pandemic demand stall to five years. Once economic activity recovers, it will likely be less oil demand-intensive than it would have been due to fuel switching, EV penetration, efficiency improvements, and accelerated climate policies.

â€œThe near-term demand uncertainty and the potential medium-to-long-term consequences add to investment hurdles and deterrents. However, it also provides a valuable opportunity for upstream investments to catch supply up with demand.

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