According to Rystad Energy research, the cost of the COVID-19 epidemic on upstream investments during the first two years of the recession is anticipated to be $285 billion, and while expenditure will gradually begin to rise beginning in 2022, it will not match pre-crisis levels in the foreseeable time.

The shale industry has been hit the worst, while conventional investigation and investments in established assets have fared the best so far.

In February 2020, before COVID-19 began to influence the global energy sector, Rystad Energy anticipated that worldwide upstream investments for the year would total roughly $530 billion, around the same as in 2019. Our projection at the time predicted that investments in 2021 would continue at the same level as the previous year.

When the COVID-19 epidemic caused a drop in oil prices in the early part of the second quarter of last year, E&P firms cut investment budgets to safeguard cash flow.

When prices soared in 2021, this spending tendency did not reverse. In comparison to pre-pandemic forecasts for 2020 and 2021, we see that expenditure dropped by roughly $145 billion last year and will decrease by another $140 billion by the end of this year. This means that COVID-19 eliminated 27% of the anticipated investments.

Upstream investment was capped at $382 billion in 2020 and is expected to increase modestly to $390 billion this year. Rystad Energy anticipates that the pandemic's impact will be long-lasting since expenditure will not return to pre-pandemic levels of $530 billion until 2022.

Growth will be modest, and investment will increase at a slow but steady pace, reaching slightly over $480 billion in 2025, whenever the report's estimate expires.

Shale/tight oil investments are the most impacted in both absolute and terms of percentage throughout the two years between 2020 and 2021, sacrificing $96 billion of previously projected expenditures, or 39 % for the industry.

Exploration investment is anticipated to fall by $19 billion, or 22%, from what was originally planned. Greenfield investment in fresh conventional projects will decline by $78 billion, or 28%, whereas brownfield investment in existing conventional projects would decline by $92 billion, or 20%.

“As shale/tight oil would be both the category with the biggest reduction in activity and also the supply source that requires the most constant new investment to keep production rising, the obvious impact on output from this sector has been important,” said Espen Erlingsen, Head of Upstream Research at Rystad Energy.