Global oil and gas investment is expected to grow by $26 billion this year as the industry continues to recover from the worst of the coronavirus, according to new analysis from Rystad Energy.


Overall oil and gas investment is forecast to climb by 4% to $628 billion this year from $602 billion in 2021.

“The pervasive spread of the Omicron variant will inevitably lead to restrictions on movement in the first quarter of 2022, capping energy demand and recovery in the major crude-consuming sectors of road transport and aviation. But despite the ongoing disruptions caused by Covid-19, the outlook for the global oil and gas market is promising,” said Rystad’s Audun Martinsen, head of energy service research.

Natural gas and liquefied natural gas (LNG) investment is seen leading the way, rising 14% in 2022 to $149 billion from $131 billion in 2021. Although still short of pre-pandemic totals, Rystad sees investment in the LNG and gas segment surpassing 2019 levels of $168 billion in only two years, reaching $171 billion in 2024.

Upstream oil investments, meanwhile, are projected to rise from $287 billion in 2021 to $307 billion this year, a 7% increase, while midstream and downstream investments are projected to fall by 6.7% to $172 billion.

Offshore Latin America Leads Charge

Worldwide, around 80 projects worth a total of $85 billion are up for approval in 2022. Latin America will be responsible for around 24% of the total offshore sanctioning values next year, tied for No. 1 as a region with Europe, according to Rystad.

Latin America offshore growth is forecast to be led by deepwater expansions in Brazil’s pre-salt and Guyana. Last October, ExxonMobil said the Stabroek block offshore Guyana holds substantially more discovered oil and natural gas recoverable resource potential than was previously believed. ExxonMobil notched the find 1 billion boe higher to 10 billion boe.

Mexico is also active offshore. Globally, new oil and gas discoveries hit a multi-decade low in 2021, but companies continued to explore and find oil and gas in Mexican waters. The Yoti West discovery off the coast of Mexico was the largest announced discovery in November.

In the offshore segment, Rystad sees increased inflationary costs for steel and other input factors being a potential challenge.

“These are likely to make operators mildly cautious regarding significant capital commitments. In addition, major offshore operators are being challenged on their portfolio strategy as the energy transition unfolds, with many exploration and production companies already directing investment budgets to low-carbon energy sources,” analysts said.

For offshore contractors, the energy transition could be advantageous for wind power developments. Spending in the offshore wind sector reached almost $50 billion last year, double the 2019 levels. By 2025, Rystad sees offshore wind investments hitting $70 billion as demand for clean energy surges.

By contrast, “the offshore oil and gas sector is set to face a challenging energy transition period with oil demand likely to peak in the next five years, capping offshore investment at about $180 billion in 2025.”

Overall, offshore investments should increase 7%, from $145 billion to $155 billion, while conventional onshore will jump 8%, from $261 billion to $290 billion, according to Rystad.

Are More LNG Projects Set For Sanctioning?

Sanctioning activity is set to rebound in North America, with more than $40 billion worth of projects due for sanctioning in 2022. Six LNG projects are expected to receive the green light, with five in the United States and one in Canada, Rystad said.

In Latin America, Mexico is the only country with planned LNG export projects.

Sempra’s 3.25 million metric tons/year (mmty) Energia Costa Azul (ECA) Phase 1 project in the port of Ensenada, Baja California state is under construction and expected online by the end of 2024. A 12 mmty second phase also is under discussion, along with the 3-4 mmty Vista Pacifico export terminal envisaged for Topolobampo, Sinaloa state.

Sempra is not alone in pursuing LNG exports from Mexico’s Pacific Coast. Mexico Pacific Limited LLC (MPL) CEO Doug Shanda told NGI’s Mexico GPI recently that the company was negotiating 22 mmty in binding offtake agreements from Asian buyers for MPL’s LNG regasification terminal planned for Puerto Libertad in Sonora state. 

Shanda said MPL is aiming to close binding offtake agreements for the first two trains and to reach a final investment decision in early 2022. The first two trains would have a combined capacity of 9.4 mmty.