Global Energy Spending to Soar This Year

Rystad, a Norwegian energy consultancy, said recently that soaring oil, gas and electricity prices, coupled with the European Union's reduced dependence on Russia for supplies and the impact of the new crown pneumonia epidemic, will make global energy expenditures soar to $2.1 trillion this year.

According to Rystad's research, oil and gas producers around the world are actively increasing their investment budgets to increase production due to the global energy shortage caused by the Russian-Ukrainian conflict. This year, upstream oil and gas industry spending will rise 16 percent, or $142 billion, from last year. In addition, the new crown pneumonia epidemic and sanctions against Russia have caused global material prices, labor costs and freight costs to rise. In terms of green energy, the global wind and solar power capacity will increase by 250 gigawatts based on current projects, and will drive a 24% increase in green energy spending, or an increase of $125 billion. Rystad estimates that the cost of oil and gas projects has increased by 10% to 20% compared with 2020 levels, mainly due to rising steel prices and a tightening supplier market. In the field of renewable energy, the prices of raw materials such as lithium, nickel, copper and polysilicon have risen sharply, causing the cost of renewable energy projects to rise by 10% to 35% over the same period.

Broken down by sub-sector, the energy sector is still dominated by oil, with spending of $658 billion, up 16%, and production will reach 99.6 million bpd. The natural gas and LNG industry will also see strong growth, with spending up 15% and production increasing from 390 million cubic feet per day to 396 million cubic feet per day. Among green energy sources, solar energy, carbon capture and storage (CCS), hydrogen and geothermal have the fastest growth rates, ranging from 40% to 60%.