*Upstream oil & gas spending to grow 16%
Lagos — Surging oil, gas and power prices together with the European Union, EU’s goals of becoming less dependent on Russian supplies and post-Covid-19 pandemic inflation will catapult global energy spending this year to $2.1 trillion, a new research has shown.
Rystad Energy research said a concern in energy markets is that the ongoing war in Ukraine will derail the energy transition, but the latest data suggests that spending in green energies will grow faster than in the fossil fuel sector.
Without Russia’s invasion of Ukraine, however, there would have been less growth in investments in oil and gas and the share of green energies in global energy spending would have been slightly more than today’s 31%.
Upstream oil and gas spending is now projected to grow 16% – or $142 billion – compared to last year as oil and gas producers around the world up their investment budgets to increase output. For green energy in 2022, global capacity will grow at 250 gigawatts, GWac, with wind and solar and lead green energy spending to grow by 24%, or $125 billion, the research said.
Another important factor pushing energy spending to new highs is the global inflation of material prices, labour costs and shipping rates caused by the pandemic and the sanctions imposed on Russia. Compared to 2020 levels, project costs in oil and gas have increased by between 10% and 20%, due largely to steel price rises and a tighter market among suppliers. Within renewables, lithium, nickel, copper and polysilicon – which are all important materials in battery and solar PV manufacture – have sent renewable project costs up by between 10% and 35% within the same timeframe.
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