he head of the International Energy Agency IEA, Dr. Fatih Birol, says the weak global investment picture in the oil and gas sector remains a source of concern. Birol in a statement on Monday said more investment in global oil and gas exploration and production is crucial to ensure future supplies are able to meet growing demand.
The head of the International Energy Agency (IEA), Dr. Fatih Birol, says the weak global investment picture in the oil and gas sector remains a source of concern.
Birol in a statement on Monday said more investment in global oil and gas exploration and production is crucial to ensure future supplies are able to meet growing demand.
“More investments will be needed to make up for declining oil fields - the world needs to replace 3 mb/d of declines each year, the equivalent of the North Sea - while also meeting robust demand growth," Birol says.
The International Energy Agency has in the past warned that drastic cuts in the oil industry investment risk creating a shortfall in supply that by 2020 will expose the market to a surge in prices.
Upstream oil and gas investment have tumbled since 2014 resulting from oil price crash that sent prices from 115 dollars in 2014 to below 30 dollars early last year. This forced international energy companies to curb investment by a quarter in 2015.
Uganda was one of the countries affected by the low global investments in the oil and gas sector especially in 2016 when government announced the first round of competitive licensing for oil and gas.
Energy and Mineral development Minister, Irene Muloni, last year confirmed that the sector in Uganda was affected by low investments witnessed globally.
The Petroleum Authority expects investments to the tune of 15-20 billion US Dollars over the next three to four years. It is expected that international oil companies and banks will invest in projects like the oil refinery and the East African crude oil pipeline among others.
The Energy Ministry is also planning another round of competitive licensing. But all those could be affected by low global investments in exploration and production.
Meanwhile, the International Energy Agency's latest annual report on oil markets
reveals that Oil production growth from the United States, Brazil, Canada and Norway can keep the world well supplied, more than meeting global demand growth through 2020, but more investment will be needed to boost output after that.
The report says over the next three years, gains from the United States alone will cover 80% of the world's demand growth, with Canada, Brazil and Norway.
The five-year market analysis and forecast finds that despite falling costs, additional investment will be needed to spur supply growth after 2020.
The oil industry has yet to recover from an unprecedented two-year drop in investment in 2015 - 2016, and the IEA sees little-to-no increase in upstream spending outside of the United States in 2017 and 2018.
Dr. Birol says the United States is set to put its stamp on global oil markets for the next five years.