Global upstream oil and gas investments are expected to plummet 24% this year, with little signs of improvement for 2017, the International Energy Agency said on Wednesday.
This year's dip will come on top of a 25% drop in spending in the sector recorded in 2015 with its total of $583 billion, the IEA said in a report, Bloomberg reported.
"The total fall exceeds $300 billion over the two years—an unprecedented occurrence," the report said, adding two consecutive years of reduced upstream oil and gas investment had not been seen for 40 years.
"Furthermore, there are no signs that companies plan to increase their upstream capital spending in 2017," it said.
A total of $900 billion was invested in oil, gas and coal in 2015, down 18% on 2014. Total global investment in all forms of energy fell 8% to $1.8 trillion last year, the report said. The largest drop in investment came in the North American upstream oil and gas sector, which also helped China to take top spot for total energy investment after three previous years of dominance by the US.
Oil prices have halved over the past two years due to a glut of production while global gas prices have made a similar retreat. The IEA said shrinking investment could help the markets to rebalance.
"At its current level, investment may be insufficient to maintain oil and gas production, indicating tighter markets ahead. Oil markets are likely to rebalance before gas markets, with low-carbon investment putting a lid on gas demand," the report said.
The IEA said on Tuesday, in a separate report, the global crude oil market would be over supplied through at least the first six months of 2017. Investment in low-carbon renewable energy reached $315 billion in 2015, making up 17% of the total. Over 90% of the renewable investment went to power generation technologies, with the rest going to solar, thermal heating installations and biofuels for transport, the report said.
Despite the rise in renewable investment, the report said the current pace of decarburization of power generation remains insufficient to meet the goals set at climate talks in Paris last year.
