Global oil & gas industry earned record $4 trillion in 2022, says IEA

Russia’s invasion of Ukraine drove natural gas prices to record levels in many parts of the world and oil to levels not seen since the mid-2010s..

Income from fossil fuel sales rose to a record high in 2022, with the global oil and gas industry earning around $ 4 trillion, International Energy Agency (IEA) said in a report released on May 25, even as efforts are to increase the share of clean and renewable energy.

IEA said high prices spurred an increase in fossil fuel investment and it expects investment in new supply to rise by 6 percent in 2023 to $950 billion.

Russia’s invasion of Ukraine drove natural gas prices to record levels in many parts of the world and oil to levels not seen since the mid-2010s, IEA said in a report.

The report, however, also pointed out that between 2010 and 2019, three-quarters of cash outflows in oil and gas industry were invested into supply. This has dropped to less than half in 2022.

“Hesitation about traditional oil and gas supply investments comes from a variety of factors, including worries about costs, uncertainties over longer-term demand, calls for the industry to step up its role in tackling climate change, and pressures from many investors and owners to focus on returns rather than production growth,” the report said.

The IEA report said global spending on renewables hit a new record in 2022 driven by solar PV and wind despite cost and supply chain pressures.

Spending on renewables was at almost $600 billion in 2022, the report said.

“Given the reinforced push for renewables in a range of large markets (e.g. USA, China, Europe, India) and the gradual unwinding of supply-chain problems, we are now expecting higher capacity additions for wind and especially solar PV than last year, with 2023 expected to see another 10% increase in renewables investment to more than USD 650 billion,” IEA said.

Despite upbeat expectations for clean power, final investment decisions in 2022 were a mixed picture.

“Solar project approvals remain strong, while offshore wind lags behind. FIDs for coal- and gas-fired plants reached their highest level since 2016, driven almost entirely by China, reflecting security of supply concerns,” the IEA report said.