Petroleum Africa
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Monday, July 24, 2023
According to research by Wood Mackenzie, investment in the sector will still allow the industry to meet peak demand in the 2030s. The company says that “efficiency gains, capital discipline and low-cost oil will keep a lid on spending requirements out to peak oil demand of 108 million barrels per day in the early 2030s.”
“Despite concerns about underinvestment in upstream, peak oil and gas demand can be met in the 2030s without a substantial increase to current annual asset development investment levels of US$500 billion in 2023 terms,” according to a new Horizons report from Wood Mackenzie.
Current upstream spending is a little more than half of the $914 billion 2014 peak (in 2023 terms), according to the report “Doing more with less: is there enough upstream investment?” This apparent shortfall has fed a widespread belief that the industry is underinvesting and that a supply crunch is inevitable, be it sooner or later.
“This was never Wood Mackenzie’s opinion” said Fraser McKay, Head of Upstream Analysis for Wood Mackenzie. “Our long-held view has been that spending and supply would rise to meet recovering demand and that the upstream industry would not and could not reprise the ignominious years of ‘peak inefficiency’ during the early 2010s.”
For more details and charts, see the Wood Mackenzie release here.
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