Does the world need more oil and gas in 2022 and beyond? If you've read any of our previous posts related to the global energy supply crunch and dire warnings of underinvestment in the oil and gas sector, you probably know the answer is a big YES.
The most plausible projection scenarios by organizations like the U.S. Energy Information Administration suggest that global oil and gas demand will continue to grow for many years yet.
As a result, major energy producers such as Norway, Brazil, and Saudi Arabia are investing tens, if not hundreds of billions of dollars into new developments as they plan for a future where oil and gas still reign supreme in the global energy mix.
With the current energy supply shock and skyrocketing prices seen in many parts of the world, it's a no-brainer for these nations to step up to the plate. The reality of supply shortages and high prices means immense profitability for major energy producers who take action today to be the suppliers of tomorrow.
Here are several examples of capital investments made by major global oil and gas producers to date that will extend into 2022 and beyond. Also see:
- More Canadian Oil is Good for Our Families & the Global Environment
- Canada Has a World-Class Record on Methane Reductions & Intensities: REPORT
- Canadian Oilsands the Best Choice for Future Supply: REPORT
Norway's Equinor plans to invest up to US $8.8 billion to develop the Wisting petroleum discovery, set to become the world's northernmost oilfield.
Located in the Arctic Barents Sea and containing close to 500 million barrels of oil equivalent, the Wisting development is subject to a final investment decision by Equinor and its partners by the end of 2022.
The United States is set to become the world's largest liquefied natural gas (LNG) exporter in 2022, surpassing Qatar and Australia, and may hold that title for years to come.
Global LNG demand has hit record highs each year since 2015, primarily due to surging demand in China and the rest of Asia. Much of that global appetite has been met by steadily rising U.S. LNG exports, which have reached new records every year since 2016 and is poised to continue in 2022.
Brazil's Petrobras will invest $68 billion from 2022 to 2026, a sharp increase from its previous five-year plan, as the state-owned oil company seeks to grow production from the offshore fields in the subsea pre-salt area.
Last year, while the rest of the world was throttling back on oil production in the throes of the pandemic, Brazil was one of the few that increased production, adding more than any other non-OPEC country except for Norway.
The South American nation wants to double crude output to become the world's fifth-largest oil exporter by 2030, requiring tens of billions of dollars in new investment.
Nigeria, the largest oil producer and exporter in Africa, hopes that its newly adopted petroleum industry law will help it hike its oil production by 310 per cent to 4 million barrels per day (bpd).
The new law will also allow the country to increase its crude oil reserves from 37 billion barrels to 40 billion barrels, and to extract more gas.
With six trains, Nigeria's LNG production capacity of 22.2 mtpa (million tons per annum), is expected to increase to 30 mtpa by 2030.
Qatar is moving ahead with the development of the nearly $30 billion North Field expansion project, planning to increase its LNG output by 40% to 110 million tonnes per annum (mtpa) by 2026 and strengthening its position as the world leading exporter of the super-chilled fuel.
Iraq plans to increase oil production to eight million bpd by the end of 2027, nearly doubling its current capacity.
Iran has not given up on plans to boost its oil production to more than 5 million bpd.
The Iranian government has also said it is drafting plans to attract some $145 billion in fresh investment—both domestic and foreign—in its oil and gas industry over the next eight years.
Saudi Arabia's national oil company will complete its 1 million bpd oil output expansion project by 2027 to bring its total production to 13 million bpd.
Aramco, the world's largest oil exporter, also wants to expand its oil trading business to 8 million bpd over the next 5 years, up 2.5 million bpd from its current rate.
The Kuwait Oil Company plans to invest more than $6.1 billion in exploration over the next five years, and increase production to 4 million barrels per day by 2040.
The State-owned company plans to drill 700 wells per year over the coming period, an increase of approximately 300 wells.
Abu Dhabi National Oil Company (ADNOC) announced a $127 billion capital spending plan for 2022-2026, as it reported an increase in the United Arab Emirates' (UAE) oil and natural gas reserves.
Russia's government plans for a long-term development program for liquefied natural gas, expecting production capacity to rise threefold from current levels to 140 million tons per year by 2035.
Sustainable Supply Chains Matter
Today, sourcing natural resources from fair trade supply chains is more important for consumers, governments and corporations than ever before. For example, many consumers purchase products and services committed to "fair trade" practices, defined as companies with "...arrangements designed to help producers in growing countries achieve sustainable and equitable trade relationships."
Meanwhile, 72 per cent of global investors integrate Environmental, Social and Governance (ESG) principles in their investment approach and decision making according to a recent report by the Royal Bank of Canada. Investors are more confident placing their money into nations with exceptional ESG performance because strong protections for workers and the environment exist. These nations also typically have high levels of governmental transparency and more sophisticated regulatory regimes, helping investor portfolios look more responsible in a world that is ever increasingly focussed on social and environmental issues while also providing a stable investment climate.
And the same goes for consumers. Many of us are much happier knowing that we're supporting goods and services committed to making the world a better place with the purchases we make. That is why we should be asking our governments to look to the most sustainable suppliers for the natural resource products we consume each and every day.
The World Needs More Canadian Oil & Gas
Nations with exemplary performance on ESG metrics should be labelled as suppliers of choice for the natural resources we need today and in the future. The reasons for doing so are abundantly clear.
Canada's world-class performance on ESG metrics is no secret. Of the world's major oil and gas producers, exporters and reserve holders, we consistently rank near the top on the following ESG-related indices:
- Green Future Index
- Democracy Index
- Global Peace Index
- Rule of Law Index
- Corruptions Perception Index
- Global Press Freedom Index
- Sustainable Development Index
- Women, Peace, Security Index
- Yale Environmental Performance Index
- Social Progress Index
- World Bank Governance Index
Blocking Canadian oil and gas projects does nothing to keep oil and gas in the ground. All it does is cede global market share to other producers, often with less transparency and weaker protections for human rights and the environment.
If global investors sincerely followed ESG performance as a guiding principle for where to put their money, Canada would be at the top of the list -- there are no "ifs," "ands," or "buts" about it.
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