The green transition is happening but it is not fast-enough or reliable-enough to respond to rapidly increasing global energy needs. Until that happens, demand for oil and gas, and E&P spending, will continue increasing. [Gas in Transition, Volume 2, Issue 12]by: Charles Ellinas
According to the International Energy Agency (IEA), the net income for the world’s oil and natural gas producers is expected to double in 2022 from 2021, to a new high of $4 trillion. The great majority of companies are reporting strong profits. With global oil and gas supplies continuing to be tight, while demand continues to grow, this has emboldened oil and gas companies into increasing E&P spending after years of caution. In fact, in 2022 oil major capex spending was half of the average since 2010 (see figure 1). 2023 will see E&P spending growth.
The outcome of COP27, even though disappointing for not increasing targets for carbon emission cuts, showed that the majority of countries see oil and gas continuing to be important for years to come. Driven by energy security concerns, not only phase-down of oil and gas did not get the required support, but the COP27 deal now includes a provision to boost “low-emissions energy”, interpreted to include natural gas.
Recent energy outlooks, by the IEA, BP, McKinsey and others, based on known policies and trends along which the global energy system is currently progressing, show that the world will still need secure and affordable supplies of oil and gas until 2050. But the…