Upstream Oil Investment Needs 30% Boost to Meet Demand
- The slow pace of the energy transition, investment gaps in green energy, and rising global energy demand could keep oil and gas consumption higher for longer.
- To meet sustained demand, global upstream oil and gas investment must rise from $500 billion to $660 billion annually.
- The world’s biggest independent oil trader, Vitol, expects global oil demand will continue to rise by 2030 to nearly 110 million barrels per day.
The investment gap in green energy and weakened policy and corporate commitment to clean energy solutions could lead to global oil and gas demand remaining stronger for longer.
In such a scenario, the world’s upstream investment would need to increase to deliver the additional volumes of oil and gas, according to an analysis by Wood Mackenzie.
While the International Energy Agency (IEA) still very optimistically expects global oil demand to have peaked by the end of the decade, the players directly involved in supply, including oil producers and commodity trading giants, see peak demand at some point next decade.
The world’s biggest independent oil trader, Vitol, expects global oil demand will continue to rise by 2030 to nearly 110 million barrels per day (bpd). Demand is likely to stay at these levels before starting to very slowly decline from the mid-2030s onwards, Vitol said in its long-term outlook earlier this month. Importantly, the commodity trading giant expects that by 2040 global oil demand will be at about the current level of around 105 million bpd.
No steep declines in consumption then, as rising population and middle-class numbers will raise demand for petrochemicals, plastics, and jet fuel, only partially offsetting an expected drop in gasoline and diesel consumption in transportation. Read more