OPEC estimates the required investment in oil at $14 trillion until 2045

Global investment in the oil industry by 2045 should amount to $14 trillion, or about $610 billion per year. This is stated in the annual report of the Organization of Petroleum Exporting Countries (OPEC).

According to the organization’s estimates, investments in oil exploration and production (upstream) by 2045 should amount to $11.1 trillion, or $480 billion annually. However, 65% of this volume will need to be invested in production in North America due to the large size of the region, the importance of oil production here for medium-term supply growth, and the relatively high cost of developing oil sands in Canada and deepwater and tight oil in the United States . Over time, the share of North America in the structure of investment in oil will decrease due to the growing importance of developing raw material deposits in other regions, OPEC believes.

In the remaining non-OPEC countries, upstream investment is expected to increase by 65.4% compared to 2022 and reach $177 billion in 2045. Investment by OPEC members is expected to grow even more, quadrupling to $136 billion in 2045, the report notes.

Investments in oil refining (downstream) and its transportation (midstream) should amount to $1.7 trillion and $1.2 trillion, respectively, until 2045.

Ensuring sustainable investment in the oil industry is a key task to maintain the stability of the global oil market and security of supply, OPEC believes. The cartel expects that in 2023, investments in production will increase by 13% year-on-year and amount to $360 billion. But they will not exceed the volume of investments in the pre-pandemic years, but will only reach this level.

“Disincentives to investment in mining, or even calls for investment cuts in this regard, are unhelpful and increase the risk of supply shortages and market volatility,” the OPEC report emphasizes.

Russian President Vladimir Putin said during the Russian Energy Week (REW) in October 2022 that the volume of investment in oil and gas production in 2020-2021. has dropped to its lowest level in the last 15 years. According to him, the decline in investment is due to pressure on the market from the green agenda. As a result, the business, he estimates, underinvested $2.5 trillion in the oil and gas industry.

Deputy Prime Minister of the Russian Federation Alexander Novak at the same time estimated an artificial reduction in investment in oil and gas around the world by more than half to $300 billion per year. At the same time, Russian companies, according to Novak, “have not yet cut their investment programs.”

According to the Ministry of Energy, capital investments of Russia’s largest oil companies in 2022 increased by 26.3% compared to 2021 to 1.8 trillion rubles. Vedomosti sent a request to the Ministry of Energy, as well as to the largest Russian oil and gas companies.

Due to underinvestment in the oil and gas industry, the world may face an acute shortage of these types of fuel, Rosneft Chief Executive Officer Igor Sechin warned at the St. Petersburg Economic Forum in June 2022. According to his estimates, to maintain the current level of production, it is necessary to invest about $17 trillion to 2040

Kasatkin Consulting partner Dmitry Kasatkin believes that in order to maintain the current level of oil production in Russia and increase it, investments need to be increased by 3-5% per year, as well as their efficiency must be increased. Increasing investment in the industry helps strengthen the country’s energy security, maintain competitive costs of raw materials in foreign markets, increase exports, including products with high added value, and develop the domestic market, the expert explains.

Previously, Kasatkin Consulting calculated that in order to maintain oil production at the 2023 level until 2030, investments must be increased annually by 2.8% per ton of oil produced, or by 62 billion rubles. up to 2 trillion rubles. in 2030 (Vedomosti wrote about this on June 1). To increase production by 1.5% per year, investments will have to be increased even more intensively: by 5.5% per ton, or by 90 billion rubles. per year up to 2.3 trillion rubles. in 2030

In the oil production segment, first of all, it is necessary to increase investment in the production of high-tech equipment, R&D and personnel training, Kasatkin believes. It is also necessary to consider such investment projects as the creation of a complex of strategic oil storage facilities, the formation of exports of engineering and services, renewal of the tanker fleet and the creation of hubs for oil storage and bunkering (refueling of ships) abroad.

In addition, it is necessary to create conditions for investments to be effective: build an ecosystem for technology development, facilitate the entry of Russian oil companies into world markets, support and provide preferential financing to projects to improve efficiency and modernize infrastructure, Kasatkin believes.