Global Gas Projects Spend Falls 35%: IEA
Spending on gas projects globally will fall 35% yr/yr to $186bn in 2020 owing to the crisis caused by the Covid-19 pandemic, the International Energy Agency said May 27.
Lockdowns and falling demand for transport and industrial energy have triggered the largest drop in global energy investment in history, with spending expected to plunge in every major sector this year, the report says.
At the start of 2020, global energy investment was on track for growth of around 2%, which would have been the largest annual rise in spending in six years, but now the value is expected to experience a 20% decline – $400bn – to around $1.5 trillion.
Oil sector spending is expected to decline 30% to $325bn, while gas investments of $186bn will be about 35% or $100bn less than they were in 2019. Investments in shale will be about half.
“The historic plunge in global energy investment is deeply troubling for many reasons,” said IEA boss Fatih Birol. “It means lost jobs and economic opportunities today, as well as lost energy supply that we might well need tomorrow once the economy recovers.”
Further, a combination of falling demand, lower prices and a rise in cases of non-payment of bills means that energy revenues going to governments and industry are set to fall by well over $1 trillion in 2020.
In 2Q global oil demand fell by a quarter and for the whole year it is expected to be about 9% less than in 2019. Brent crude. which was about $70/b in late 2019, plunged to $20 in some days of April and after the Opec+ oil cut agreement is fluctuating around $35/b.
Power sector spending is on course to decrease by 10% in 2020, with worrying signals for the development of more secure and sustainable power systems.
The most worrying issue for the IEA is that investments in renewable power and energy efficiency are expected to decline by 9.6% and 12% to $281bn and $219bn respectively. It can challenge global efforts to contain emissions growth which is linked to global warming. On the other hand, global spending on coal projects is also expected to decline, but not by much: from $90bn in 2019 to $79bn this year.