According to the International Energy Agency (IEA), global energy investment is expected to reach a record USD 3.3 trillion in 2025. A significant transformation is underway: two-thirds of this amount, USD 2.2 trillion, is earmarked for clean energy sources such as renewables, nuclear power, and electric vehicles. The remaining USD 1.1 trillion will be allocated to fossil fuels, including oil and gas. This shift presents both challenges and opportunities for oil and gas leaders, who must rethink strategies in the face of rising clean energy dominance.
Despite an overall 6% decline in global oil investment, the Middle East is emerging as a stronghold. With some of the lowest production costs worldwide, the region is projected to command a record 20% share of global upstream investment. This positions national oil companies (NOCs) and service providers in the Middle East to expand their market influence and secure a more prominent role in the evolving energy landscape.
Meanwhile, liquefied natural gas (LNG) is drawing massive investment. Countries like the U.S., Qatar, and Canada are expanding their LNG capacities, with the U.S. on track to nearly double its export capability by 2028. This signals increasing competition in the sector, and Middle Eastern exporters will need to innovate and invest to maintain their edge.
Gas Remains Vital Amid Soaring Electricity Demand
While the clean energy sector accelerates, natural gas continues to play a vital role in meeting surging electricity demand driven by AI technologies, expanding data centers, and increasing cooling needs worldwide. For the first time, power sector investment has surpassed that of oil and gas. However, gas-fired power remains essential, particularly in the U.S. and the Middle East, which together accounted for nearly half of the new gas power projects initiated in 2024.
Emerging technologies like hydrogen and carbon capture, utilization, and storage (CCUS) are beginning to attract attention, with projected investments of around USD 30 billion in 2025. While still minor compared to traditional energy sectors, these technologies represent a growing space. Most hydrogen and CCUS projects currently rely on government support and have faced implementation delays. Nonetheless, if all approved CCUS initiatives proceed as planned, the sector’s investment could rise tenfold by 2027, marking a promising frontier for oil and gas diversification.
Regional Imbalances and Financial Trends Shift the Energy Equation
Despite the global push toward clean and diversified energy, Africa is falling behind. global energy investment across the continent in 2025 will be one-third lower than a decade ago, largely due to high debt costs. For oil and gas firms operating in Africa, this presents both a challenge and an opportunity. Strategic co-investment in infrastructure could unlock growth, enhance energy access, and stabilize operations in the region.
On the financial front, sustainable financing, which once fueled the clean energy boom, is facing setbacks. While green bonds continue to attract interest, broader support is waning amid regulatory and policy uncertainties. This slowdown may offer short-term advantages to oil and gas companies, providing them time to recalibrate and diversify their energy portfolios.
In this redefined energy landscape, clean energy is undoubtedly gaining momentum, but oil and gas still have a pivotal role to play. For industry leaders, especially those in the Middle East, strategic global energy investment, innovation, and agility will be crucial in shaping a balanced, secure, and profitable energy future.
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