Publicación

The Impact of The financial and economic crisis on Global energy Investment
OECD / IEA
05/2009

Energy investment worldwide is plunging in the face of a tougher financing environment, weakening final demand for energy and falling cash flows – the result, primarily, of the global financial crisis and the worst recession since the Second World War. Reliable data on recent trends in capital spending and demand are still coming in, but there is clear evidence that energy investment in most regions and sectors will drop sharply in 2009. Preliminary data points to sharp falls in demand for energy, especially in the OECD, contributing to the recent sharp decline in the international prices of oil, natural gas and coal. Both supply and demand side investments are being affected. Energy companies are drilling fewer oil and gas wells and cutting back spending on refineries, pipelines and power stations. Many ongoing projects are being slowed and a number of planned projects have been postponed or cancelled – for lack of finance and/or because of downward revisions in expected profitability. Meanwhile, businesses and households are spending less on energy-using appliances, equipment and vehicles, with important knock-on effects for efficiency of energy use. Tighter credit and lower prices make investment in energy savings less attractive financially, while the economic crisis is encouraging end users to rein in spending across the board, as a defensive measure. This is delaying the deployment of a more efficient generation of equipment. Furthermore, equipment manufacturers are expected to reduce investment in research, development and commercialisation of more energy-efficient models, unless they are able to secure financial support from governments.
Impact by sector
In the oil and gas sector, there has been a steady stream of announcements of cutbacks in capital spending and project delays and cancellations, mainly as a result of lower prices and cash flow. We estimate that global upstream oil and gas investment budgets for 2009 have already been cut by around 21% compared with 2008 – a reduction of almost $100 billion. Between October 2008 and end-April 2009, over 20 planned large-scale upstream oil and gas projects, valued at a total of more than $170 billion and involving around 2 mb/d of oil production capacity and 1 bcf/d of gas capacity, were deferred indefinitely or cancelled. A further 35 projects, involving 4.2 mb/d of oil capacity and 2.3 bcf/d of gas capacity, were delayed by at least 18 months. It is likely that the upstream industry will reduce spending on exploration most sharply in 2009 – largely because the bulk of spending on development projects is associated with completing projects that had already been launched before the slump in prices. Oil sands projects in Canada account for the bulk of the postponed oil capacity. The drop in upstream spending is most pronounced in the regions with the highest development costs and where the industry is dominated by small players and small projects. For these reasons, investment in non-OPEC countries is expected to drop the most. In addition, cuts in spending on existing fields risk pushing-up decline rates. International Energy Agency 4 The Impact of the Financial and Economic Crisis on Global Energy Investment – © OECD/IEA 2009