By Chibisi Ohakah, Abuja
A study has said that despite challenges currently faced by the global oil and gas market, investments in the sector may grow by $26 billion in 2022, globally.
This corresponds to a 4% rise from last year (2021), the survey made public yesterday by Rystad Energy stated. Rystad Energy is a Norway based, independent energy research and business-intelligence company. It is a world-leading analysis company for the oil and gas industry. The company provides data, tools, analytics and consultancy services for the industry.
In the study Rystad estimated that the sector would continue its recovery from an unprecedented downturn caused by the Covid-19 pandemic in 2020. “In 2021, global oil and gas investments hit $602 billion, but in 2022 investments would rise to $628 billion,” the firm predicted.
The data firm said the increase is being driven by a large 14% growth in upstream gas and Liquefied Natural Gas (LNG) investments. “Both of these segments are set to be the fastest growing in 2022, with investments increasing to $149 billion, up from $131 billion last year,” it said.
While this appears to be a significant increase, it still falls short of pre-pandemic levels, with investment levels not expected to surpass 2019 levels of $168 billion until 2024, the report further said.
Head of Energy Service Research at Rystad Energy, Audun Martinsen, said: “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.
“But despite the ongoing disruptions caused by Covid-19, the outlook for the global oil and gas market is promising,”
Whereas upstream oil investments were expected to grow to $307 billion in 2022, a 7% increase from the $287 billion reported in 2021, Martinsen said midstream and downstream investments, however, will fall by 6.7%, reaching $172 billion.
“In shale, investments are forecasted to rise 18% to $102 billion this year, compared to $86 billion last year, while offshore and conventional onshore investments are both expected to increase 7% and 8% respectively,” he said.
Rystad warned however that major offshore operators could be challenged on their portfolio strategy this year as the energy transition continues apace. In particular, the firm stated that for offshore contractors, the energy transition.
“could be advantageous for wind power developments,” after the sector doubled in size to $50 billion last year over 2019 levels.
Rystad said the picture is less rosy for the offshore oil and gas, however, with the prediction that oil demand will likely peak within the next five years and subsequently cap offshore investment to around $180 billion in 2025.
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