*The IEA’s 2020 World Energy Investment report, released 27 May, reckons global oil and gas spending will fall by 32% (about $250bn) this year, a larger fall than in the previous investment collapse in 2015 (see chart and MEES, 16 September 2016). This investment collapse not only more than wipes out the modest increases in spending since the 2016 nadir, it leaves expected 2020 spending at a mere 42% of 2014’s peak outlay. And this is in nominal terms – in real terms the fall is much larger.
*Unlike the 2015-16 spending slump, when the effect of capex cuts was mitigated by falling upstream costs – a 40% fall in spending over 2014-2019 led to a much smaller 12% reduction in upstream activity – “the scope for further cost reductions today is much more limited, because much of the efficiency gains have already been harvested.” (CONTINUED - 378 WORDS)
