Oil and gas prices are recovering from their pandemic lows, but the path ahead for the industry remains challenging amid new competitive threats and investor demands.
Global spending on oil and gas production is expected to remain below pre-pandemic levels until at least 2025, according to consultancy Wood Mackenzie, as companies face pressure to improve returns and reduce their greenhouse gas emissions . Meanwhile, investment in renewable energy and other clean energy technologies is taking off, threatening to consume the oil and gas market in the long run.
Although oil prices have seen gains since November, they are expected to remain below levels that support attractive returns, especially for an industry that is still recovering from last year’s historic drop in fuel demand.
As a result, companies are not returning to drilling. A third of oil producers surveyed by the Federal Reserve’s Dallas branch in the fourth quarter said they plan to increase capital spending only slightly this year. About half said they would keep spending stable or reduce investment.
Exxon Mobil Corp. and Chevron Corp. they cut combined investment plans from $ 260 billion by 2025 to as low as $ 177 billion.