Investment in oil and gas exploration and production this year is seen falling 21 per cent, or almost $100 billion, due to the economic crisis, the International Energy Agency said.
The IEA also said yesterday it expected global power consumption to fall as much as 3.5 per cent this year - the first annual contraction since the end of World War Two.
The agency presented the report at a Group of Eight energy ministers meeting, where energy leaders debated the oil price needed to sustain investment without hurting a wider economic recovery.
“We estimate that global upstream oil and gas investment budgets for 2009 have already been cut by around 21 per cent compared with 2008,” the report said.
The IEA said that between last October and the end of April over 20 planned large-scale upstream oil and gas projects - valued at a total of more than $170 billion - were deferred indefinitely or cancelled.
Those projects involved around 2 million barrels per day of oil output and 1 billion cubic feet per day of gas capacity. A further 35 projects were delayed by at least 18 months.
“Oil sands projects in Canada account for the bulk of the postponed oil capacity,” the report said.
“Investment in non-OPEC countries is expected to drop the most,” it said, adding that spending cuts on existing fields also risked pushing up decline rates.
Investment cuts will only affect capacity with a lag, so in the near term weaker demand was likely to result in an increase in spare or reserve production capacity, the IEA said.
But it said that that if the current trend was sustained, there was a danger it could lead to a shortage of capacity and another spike in energy prices once the global economy recovers.
Reuters