Wednesday, Sep 28, 2022
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Global investment in oil and gas to see 29% decline from last year

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On an estimate, energy companies will spend $383 billion this year on oil and gas drilling and pumping

Global spending on oil and gas drilling is expected to drop to the lowest level in 15 years, according to a recent report published by Rystad Energy. On an estimate, energy companies will spend $383 billion this year on oil and gas drilling and pumping.

The report observed that the estimated amount is a 29 percent decrease from $539 billion spent in 2019. Rystad Energy’s upstream analyst Olga Savenkova told the media, “As the impact will be more severe than in the previous downturn, companies are fiercely defending shareholder value and pivoting towards more conservative spending strategies in the near-term. As the global upstream sector contends with low prices, falling demand, and fluctuating exchange rates, every dollar cut will strike directly to the bone.”

When the pandemic started, the global upstream spending was anticipated to drop between 15 percent and 20 percent to nearly $80 billion to $100 billion. That said, offshore deepwater spending is expected to drop by 15.6 percent to $69 billion this year, while offshore shelf will fall by 14 percent to $59.5 billion.

“Companies are now highly risk-averse, with finances and operational performance under intense pressure. Nevertheless, E&Ps will need to prepare for opportunities and threats that may await them once the crisis is past. Their future success depends on how prudent they are in adapting new strategies, taking advantage of emerging opportunities and mitigating risks,” Savenkova concludes.

Experts estimate spending to remain flat next year, with a measly increase from 2020.

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