The latest IEA report says clean energy investments will double those of fossil fuels this year. Plus, Equinor signs a long-term gas supply deal worth more than $27 billion with UK-based Centrica.
My team and I participated in the Houston Sectional Bridge Tournament this past weekend. We finished second in the top group on Saturday, competing against many lifetime masters. It was so fun to enjoy this fantastic game with so many like-minded folks.
Now, let’s dig into two pieces of energy news from the past week.
Shangyou Nie
Editor, Well Read
IEA Report Predicts Clean Energy Investment Will Be Double That of Fossil Fuel Investment in 2025
Boy Anthony/ Shutterstock.com
The International Energy Agency predicts that about $3.3 trillion will be invested in global energy sector in 2025, with two-thirds going into clean energy and one-third to fossil fuels. The continued investment in clean energy comes at a time when many oil and gas companies are beginning strategic refocuses toward their core business.
About the report:
On 5 June, the Paris-based IEA published its “World Energy Investment 2025” report.
The report provides an update on energy investments in 2024, predicts statistics for the current year, and tracks capital flows in energy sectors across different countries. The new edition also reflects on energy investment over the past decade.
The IEA defines clean energy to include renewables, nuclear, grids, storage, low-emission fuels, efficiency, and electrification.
On global investments:
An estimated $3.3 trillion will flow into the global energy market this year, an increase of two percent over 2024.
Nuclear investment has risen 50 percent globally over the past five years.
Global investment in solar will reach $450 billion in 2025.
Global investments in power generation for data centers will reach $20 billion in 2025 and is projected to grow to $37 billon by 2030.
Regional statistics:
China represents a key driver for energy investment. The country invested close to $900 billion into its energy sector in 2024, with nearly 70 percent going toward clean energy.
The United States invested roughly $580 billion into the energy sector in 2024, with about 35 percent going toward fossil fuels.
Europe invested around $500 billion into its energy sector last year, but only about $50 billion, or 10 percent, went into fossil fuels.
On fossil fuel investments:
Global upstream oil investment is estimated to reach roughly $430 billion in 2025, a six percent drop from 2024. This is the first down year since 2019.
Upstream gas investment is estimated to be roughly $120 billion globally for 2025—about the same as it was in 2024.
Global exploration expenditure for conventional oil and gas fields is roughly $50 billion, a 2 percent increase over 2024. This is roughly half of what was invested in 2015.
U.S. investments in unconventional oil and gas will total approximately $105 billion in 2025, representing a 10 percent drop from 2024 and a second consecutive year of decline.
2025 is predicted to be the third year in which companies will invest less than 50 percent of cash flow into their capital programs. The report estimates that more than 50 percent of cash flow will be used across share buybacks (30 percent) and dividends (23 percent) in 2025.
In 2015, capital investment represented about 70 percent of companies’ cash flow, with less than 10 percent going into share buybacks and roughly 20 percent paying dividends.
What to watch:
Despite several companies’ recent refocus to oil and gas, global investment in clean energy continues to outpace that of fossil fuels, especially in China and Europe.
2025 looks to be the third consecutive year of decline in upstream investment in U.S. shale oil and gas.
Equinor Signs Long-Term Gas Supply Deal with United Kingdom-based Centrica
JHVE/Shutterstock.com
Norwegian major Equinor signed a 10-year gas supply agreement with United Kingdom energy company Centrica worth more than $27 billion. Equinor will supply around five billion cubic meters of gas to the United Kingdom annually, representing about 10 percent of the country’s annual gas consumption.
Equinor will pipe the gas from its gas fields on the Norwegian side of the North Sea.
According to the Financial Times, the deal includes a clause for the gas to be replaced by Equinor’s hydrogen production projects.
By the numbers:
The United Kingdom’s total gas demand in 2024 was 55.8 billion cubic meters, according to Equinor.
Centrica says the United Kingdom imported 66.2 percent of its total gas demand in 2024. About half of those imports were from Norway.
The top five suppliers of LNG to the United Kingdom are the United States, Qatar, Peru, Angola, and Trinidad & Tobago.
According to S&P Global, the United Kingdom has a relatively small gas storage capacity of roughly 10 billion cubic meters.
Gas storage scarcity makes the United Kingdom more dependent on in-time gas supply from pipes or LNG and subjects the country to gas price volatility.
According to the Institute for Energy Economics and Financial Analysis, the United Kingdom’s LNG imports in 2024 fell 47 percent YOY. Europe’s LNG imports fell 19 percent in 2024 YOY, due in part to renewable energy growth.
What they are saying:
“The flexibility that natural gas offers would play a key role in enabling further development of renewable power and decarbonization in the United Kingdom,” said Equinor President and CEO Anders Opedal.
“The lights stay on because of our friends in Norway,” said Chris O’Shea, group CEO for Centrica.
“Today’s deal not only ensures the United Kingdom’s energy security has improved but also paves the way for a burgeoning hydrogen market,” added O’Shea.
🚨Trend alert:
This deal is representative of European countries’ continuing efforts to become less dependent on Russian gas imports by securing gas from other sources.
It also signals a continued transitional role for gas in the United Kingdom’s energy mixture in the mid-term future.
More pipeline gas imports into the United Kingdom might mean reduced LNG from other countries—such as the United States and Qatar—while the United Kingdom continues to grow its renewable energy.
Sponsored
Outperform with GVERSE GeoGraphix
Achieve faster, more accurate seismic interpretations with our advanced geophysical tools.
👍 If you enjoyed this edition of Well Read, consider supporting AAPG's brand of newsletters by forwarding to a friend or colleague and signing up for our other newsletters here.
➡️ Was this newsletter forwarded to you? Sign up for Well Read here.
AAPG thanks our advertisers for their support. Sponsorship has no influence on editorial content. If you're interested in supporting AAPG digital products, reach out to Melissa Roberts.
.png?upscale=true&width=220&upscale=true&name=Shangyou-Nie-Headshot-Signature%20(1).png)
