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Global oil and gas investments will expand by US$26 billion this year as the industry continues its protracted recovery from the worst of the pandemic and the hurdles imposed by the Omicron variant. An analysis by Rystad Energy projects overall oil and gas investments will rise 4% to US$628 billion this year from US$602 billion in 2021. A significant factor behind the increase is a 14% increase in upstream gas and LNG investments. These segments will be the fastest-growing this year, with a jump in investments from US$131 billion in 2021 to around US$149 billion in 2022. Although this falls short of pre-pandemic totals, investments in the sector are expected to surpass 2019 levels of US$168 billion in just two years, reaching US$171 billion in 2024. Upstream oil investments are projected to rise from US$287 billion in 2021 to US$307 billion this year, a 7% increase, while midstream and downstream investments will fall by 6.7% to US$172 billion this year. “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,” says Audun Martinsen, head of energy service research at Rystad Energy.
Market researcher, Rystad Energy has forecasted over one million jobs in the oilfield service industry to be lost in the wake of coronavirus outbreak. The looming layoff wave is being attributed to low project volumes because of the Covid-19 pandemic. The oilfield services industry employs over five million people globally. Analysts at Rystad Energy predict that the contractors will drop at least 21% of their workforce.
According to Rystad Energy, the current tailwind in the oil market is likely to propel 100 new offshore projects to be sanctioned in 2018. These projects are geographically widespread and represent a collective capital investment worth $100 billion, with very little risk of not materializing. Moreover, the project costs have come down by 50% owing to streamlining of operations.