In February 2020, before Covid-19 started impacting the global energy system, Rystad estimated global upstream investments for the year would end up at around $530 billion, almost at the same level as in 2019.
Rystad’s forecast at the time suggested 2021 investments would remain in line with the previous year’s level.
However, as the Covid-19 pandemic triggered a collapse in oil prices during the early part of the 2nd quarter last year, E&P companies slashed investment budgets to protect cash flow.
This spending trend was not reversed in 2021, when prices rose.
Compared to pre-pandemic estimates for 2020 and 2021, Rystad observes that spending fell by around $145 billion last year and will end up losing $140 billion by the end of this year.
This implies Covid-19 removed 27 % of planned investments.
Upstream spending was limited to $382 billion in 2020 and is forecast to marginally grow to $390 billion this year.
Rystad expects the effect of the pandemic to be a lasting one as – even though spending will start growing from 2022 – it will not return to the pre-pandemic level of $530 billion.
Growth will be limited and investments will only inch up annually, rising to just over $480 billion in 2025, when this report’s forecast ends.
Exploration spending is expected to drop by $19 billion, or 22%, compared to what was previously forecast.
Greenfield investment in new conventional projects will suffer a $78 billion loss, or 28%, while brownfield investment in existing such projects will fall by $92 billion, or 20%.
Author: Nermina Kulovic
