BAKU, Azerbaijan, April 6. In 2023, global oil and gas investment is expected to rise further, largely due to higher investment in the upstream sector, as well as a marked increase in LNG import terminals particularly in Europe, the Gas Exporting Countries Forum (GECF) said, Trend reports.
The report released by GECF reveals that the current shift of government interventions from energy transition to energy security can also provide some opportunities for increased investment in gas and LNG projects.
“However, while investment is expected to remain high this year, there are several looming uncertainties that may deter investment in the industry. A deceleration of global economic growth, tight monetary policies, high energy price volatility and geopolitical tensions may challenge investment decisions. In addition, long-term demand uncertainty, changes to environmental policies and government regulations, and competition with renewables and other low-carbon energy sources for capital will add some challenges to securing investment in the longer term,” GECF analysts say.
GECF experts believe that investors may seek to mitigate these evolving risks by increasing return thresholds and accelerating payback periods.
“In this regard, small-scale projects with access to existing infrastructure and modular projects that can be operational in a shorter timeframe may be preferred by investors, as opposed to traditional large-scale projects. These projects are likely to be favored in an investment climate of great uncertainties as they require less capital, have shorter payback periods and have lower risk exposure. The underlying fact is that adequate investment is crucial for the stability of the global gas market and longevity of the gas industry. Moreover, continued underinvestment can have detrimental effects, including more frequent energy price shocks, increased price volatility and supply shortages. This not only negatively impacts the sustainability and stability of the gas industry, but it can have long-lasting effects on global economic growth and sustainable development.”
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