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in Q422, at nearly 70 percent. LNG supply offset lower Russian volumes in 2022, along with a sharp fall in consumption by energy-intensive users and power generators. Russian flows to Europe over the next few years are impossible to predict — they could even drop to zero. One bank analyst told Breakbulk he expected a “cold war” in energy relations with Russia, with volumes taking years to recover, and probably only partially at best.

Despite the upheaval of global energy markets and the threat of recession in 2022, investment remained robust. The industry saw upstream oil and gas spending rise to just under US$500 billion, up nearly 40 percent on 2021, said a report by the International Energy Forum, or IEF, and S&P. This was partly driven by higher costs, but activity such as drilling was also up.

The IEF/S&P report stressed, however, that investment needs to rise further to meet supply needs and avoid a shortfall that would risk higher energy prices and endanger security of supply. It said investment of US$4.9 trillion will be needed by 2030 to match demand, or US$640 billion per year by 2030.

Money in the Coffers

Oil and gas companies certainly have funds. High energy prices generated bumper profits last year – and the issue now is moving from availability of capital to allocation of capital. Shell and BP earned US$40 billion and US$28 billion in 2022 respectively, for example, but were outstripped by state-owned oil company Saudi Aramco, which made net profits of US$161 billion, up from US$121 billion in 2021.

Aramco has increased capital expenditure in energy projects accordingly, by 18 percent to US$36 billion. The firm said: “Given that we anticipate oil and gas will remain essential for the foreseeable future, the risks of underinvestment in our industry are real — including contributing to higher energy prices.” Saudi Aramco said it is investing in extra oil, gas and chemical production, but also US$1.5 billion in new lower carbon technologies. It expected to invest US$45-55 billion this year and increase capex until mid-decade.

Key investments including increasing productivity at existing fields, the completion of the Hawiyah Unayzah gas storage reservoir, and investments

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12:00 - 12:30 in refinery and petrochemical projects in China and Saudi Arabia. The firm also began construction on its US$7 billion Shaheen petrochemical plant in South Korea through subsidiary S-Oil.

But oil and gas were not the only projects. With the Saudi energy ministry, Aramco also announced plans to build one of the world’s largest carbon capture and storage hubs at Jubail on the east coast of Saudi Arabia, with partners Linde and Schlumberger. When complete in 2027, it will be able to store 9 million tons per year of carbon dioxide, and the country eventually aims to capture 44 million tons per year by 2035. The kingdom is also boosting spending on renewables as it targets generating half of its electricity from green sources by end-decade. It is spending US$9bn on 13 renewable energy projects with total capacity of 11.4 GW.

LNG Powering Middle East Projects

Elsewhere in the Middle East, Qatar is embarking on the LNG industry’s largest ever project — the North Field Expansion, which will cost up to US$50 billion. This will see production