The latest report from the International Energy Agency said on Tuesday, fossils fuels are no longer the largest recipient of investment in the energy sector.
For the very first time, ever investment in the electricity sector got the largest level of investment. Growing its share by 12 percentage points to 43 percent between 2016 and 2016. And if we compare it with the investment of oil and gas sector than oil and gas investment fell 44 percent.
The executive director of the IEA Fatih Birol told CNBC on Tuesday, “The key finding is that (the) global energy industry spent last year 12 percent less than the previous year, a big decline,” he described.
The global drop in energy asset was mainly caused by falling unit capital costs in upstream oil and gas but also due to the abridged drilling and less fossil fuel-based power capacity.
China is the largest recipient of the energy investment and it represents 21 percent of the global share. According to Birol from IEA, the surprising story was India, because it jumps 7 percent from 2015 to 2016 in terms of energy investment.
He said: “India is moving to the center stage of global energy affairs.”
The IEA is still confident that the global oil and gas upstream investment will come back to growth this year, by about 6 percent. This is because of the current OPEC-led deal to freeze production until March 2018. IEA warned that many of the largest oil and gas companies are still implementing a “continuous approach” and as a result have specified their intentions to revise their expected investment plans in case oil prices do not remain above $50 a barrel.
About market prices, in the aftermath of the OPEC deal, Birol said: “What we see is no major rebound. Therefore what worries me a lot is, around 2020s, a major demand-supply gap with serious implications for the markets.”
Investment in the electricity sector grew by 12 percentage points to 43 percent between 2014 and 2016. So, it’s time to work on the investments in the oil and gas sector to meet the growing demand in