BAKU, Azerbaijan, June 5. The International Energy Agency (IEA) projects a 4% decline in global upstream oil and gas investment in 2025, bringing total spending to just under $570 billion, Trend reports.
This would mark the first drop in upstream investment since 2020, driven primarily by a more than 6% reduction in oil investment. Meanwhile, investment in gas is expected to see a slight increase, reflecting a shift in focus among many companies toward gas projects, including LNG developments that are less affected by current price pressures.
Major oil companies have already revised their spending plans downward, prioritizing shareholder returns through dividends and share buybacks over capital and operational expenditures. Exploration budgets are forecast to remain flat at around $50 billion, with about 25% of upstream investment allocated to new fields, similar to 2024 levels. However, new project approvals could be delayed as companies seek greater market clarity.
Cost inflation remains a significant concern for the industry. Tariffs, rising offshore drilling rates, and higher prices for basic materials - accounting for 40% of upstream costs - are expected to push conventional upstream expenses up by 3% in 2025. In the U.S., onshore unconventional drilling costs may rise by 2%, partially offset by falling rig rates.
When adjusted for cost inflation, the IEA estimates that upstream activity levels will decline globally by about 8% in 2025, signaling a cautious investment climate amid economic uncertainty and volatile oil prices.
