Wood Mackenzie: Oil and gas investments could exceed 60% in 2025

The global data and analytics company Wood Mackenzie said in a recent report that oil and gas investments in the world’s 23 largest producers are expected to rise by more than 60% by next year. Compared to their lows in 2020 and the pandemic closures.

It noted that major oil companies reinvest up to 50% of their income on average, while individual companies return between 35% and 60% to their shareholders in the form of dividends or share buybacks. Moreover, the bulk of investments, especially among companies that Wood Mackenzie calls the emerging mega-caps, go to the upstream sector. For the emerging mega-caps, up to 90% of total investment goes to this sector, which means more production and exploration.

The research company considered that the main driver is the early realization that the transition is proceeding more slowly than expected, which means that demand for oil and gas may be stronger for longer. As Europe’s majors look to plug production and cash flow gaps by investing more in upstream,

Meanwhile, majors in the US and some startups have already used mergers and acquisitions to expand and extend upstream exposure.

The company expects more consolidation across the sector next year. Industry watchers warned of a greater refocus on core businesses among oil and gas majors earlier this month when BP said it would abandon its goal of cutting oil and gas output by 2030. It is now looking to boost oil and gas production in key regions such as the Gulf of Mexico and the Middle East.