Rystad Energy forecasts investments of US$ 628 billion in the oil industry this year
Global investments in oil and gas should grow 4% in 2022, in relation to 2021, according to estimates by Rystad Energy. In all, the Norwegian energy market intelligence and research firm forecasts $628 billion in oil industry investments this year, $26 billion more than last year as companies recover from the effects of the pandemic. The expectation is that investments will continue to rise in2023 and 2024 and that Brazil will maintain its position as the world’s leading market for floating platforms (FPSOs).
According to Rystad, Latin America will account for 24% of all deepwater production projects to be sanctioned this year in the world, leveraged by Brazil and Guyana. The region will be the big highlight in this regard, along with Europe, which will also account for 24% of all projects approved offshore. Rystad estimates that there are about 80 global projects, worth US$ 85 billion, in the oil companies’ portfolio for 2022.
By 2022, Brazil is expected to maintain its leadership in the world market for floating platforms (FPSOs). In Brazil, Petrobras, the main operator in the country, has already announced that it intends to increase investments starting this year. The budget for 2022 is $11 billion, up from the $10 billion originally planned for 2021. The investments of the Brazilian state-owned company represent about 1.75% of the global budget estimated by Rystad for the year.
The focus of Petrobras’ investments for 2022 is on the exploration and production segment, which will absorb 80% of the resources. Among the main projects scheduled for the year is the entry into operation, in the first quarter, of the FPSO Guanabara, the first unit of the definitive production system of the Mero field, in the Santos Basin pre-salt. Part of the investments will also be directed to the development of the company’s robust portfolio of projects for the coming years. In all, Petrobras foresees 14 platforms for 2023-2026.
Enauta, for example, also intends to define this year the final project of Atlanta, in the post-salt of the Santos Basin. The oil company expects to make a final decision on the investment in the first quarter. In December, the company signed a letter of intent with Yinson for the conversion of the platform that will operate in the concession. The vessel will have the capacity to produce 50,000 barrels/day.
Driven by Petrobras, Brazil accounted for twelve of the 24 new FPSOs contracted worldwide between 2019 and 2021, according to Rystad. For 2022, the forecast is that the Brazilian market will absorb three of the ten platforms to be contracted. Although there is a forecast reduction in the pace of hiring, Brazil remains the main destination for new FPSOs.
According to Rystad, global investments in natural gas will be the highlights in 2022. Gas exploration and production and the liquefied natural gas (LNG) sector should demand $149 billion, up 14% compared to 2021. The expectation is that the amount will still remain below pre-pandemic levels and will only exceed the 2019 budget again in 2024, when $171 billion is expected in the sector.
Investments in oil exploration and production, meanwhile, are expected to increase by 7%, from $287 billion in 2021 to $307 billion this year. The sector, says Rystad, should face a challenging period ahead of the energy transition. The forecast is that demand for oil is likely to peak in five years, limiting offshore investment to about $180 billion in 2025. The concern in the sector, according to Rystad, is about execution challenges related to the pandemic and rising inflationary costs of steel, for example.
Meanwhile, investments in midstream and downstream (from transportation to refining and fuel distribution) will drop 6.7% to $172 billion this year.
“The widespread spread of the omicron variant will inevitably lead to movement restrictions in the first quarter of 2022, limiting energy demand and recovery in the major oil consuming sectors of trucking and aviation. Despite the ongoing disruptions caused by covid-19, however, the outlook for the global oil and gas market is promising,” wrote Rystad’s head of energy services research, Audun Martinsen.
In addition, Rystad points out that as the energy transition progresses, oil companies will increase investments in offshore wind – which took in nearly $50 billion in 2021 and is expected to receive $70 billion per year by 2025.