Global upstream spending decreased by US$285 billion in two years

According to a report from Oil & Gas News on May 16, according to a report from Rystad Energy, the impact of Covid-19 on upstream investment is estimated to be as high as US$285 billion in the first two years of the economic downturn, despite spending from 2022.

In February 2020, before Covid-19 starts to affect the global energy system, Rystad Energy estimates that the global upstream investment for the whole year will eventually reach approximately US$530 billion, almost the same as in 2019.

However, as the Covid-19 pandemic triggered a plunge in oil prices at the beginning of the second quarter of last year, exploration and production companies cut their investment budgets to protect cash flow.

In 2020, upstream spending is limited to 382 billion U.

In the two years from 2020 to 2021, the absolute value and percentage of shale oil/tight oil investment have been the most affected, losing $96 billion in expected expenditures, or 39% of the industry.

Espen Erlingsen, Head of Upstream Research at Rystad Energy, said: “Since shale oil/tight oil is the sector with the largest decline in oil and gas activities, it is also the source of supply that needs continuous reinvestment to maintain production growth.

Cao Haibin excerpted from Oil & Gas News

The original text is as follows:

Upstream spending, cut by $285 billion in two years

The toll of the Covid-19 pandemic on upstream investments in the first two years of the downturn is estimated at a whopping $285 billion, and although spending will slowly start to rise from 2022, it will not reach pre-crisis levels in the coming period , according to a Rystad Energy report.

　　In February 2020, before Covid-19 started impacting the global energy system, Rystad Energy estimated global upstream investments for the year would end up at around $530 billion, almost at the same level as in 2019.

　　However, as the Covid-19 pandemic triggered a collapse in oil prices during the early part of the second quarter last year, E&P companies slashed investment budgets to protect cash flow.

　　Upstream spending was limited to $382 billion in 2020 and is forecast to marginally grow to $390 billion this year.

　　Over the two-year period between 2020 and 2021, shale/tight oil investments are the ones most affected in both absolute and percentage terms, losing $96 billion of the previously expected spending, or 39% for the sector.

　　“Since shale/tight oil is both the segment with the highest decline in activity and the supply source in greatest need of continuous reinvestment to keep production growing, the immediate impact on output from this sector has been significant,” says Espen Erlingsen, head of upstream research at Rystad Energy.