Upstream oil investment is expected to decline by 6% in 2025, marking the first drop since 2020 and the steepest since 2016. This is according to the International Energy Agency (IEA) in its World Energy Investment 2025 report, released this week.
The IEA said it initially anticipated flat upstream spending based on company announcements but now reports a “more downbeat” outlook due to weakening oil prices.
Total upstream oil and gas investment is projected to decline by around 4% to just under US$570 billion. “Forty percent of this is dedicated to slowing down production declines at existing fields,” the IEA stated.
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Natural gas investment is expected to remain steady at 2024 levels, offsetting deeper cuts in oil spending. Meanwhile, global refinery investment is expected to hit its lowest level in a decade in 2025.
In contrast, spending on new LNG projects is accelerating, with major expansions underway in the United States, Qatar, and Canada. Projects under construction in the U.S. alone could add 130 billion cubic meters of annual export capacity, nearly doubling current levels.
“These projects bring not only additional volumes but also destination flexibility to international gas markets,” the report noted. Investment in low-emission fuels will hit a record high in 2025, though still under US$30 billion, the IEA noted.
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The Agency warned that such projects remain “heavily dependent on policy and regulatory support”. If all approved carbon capture, utilization and storage projects move forward, investment could rise more than tenfold by 2027.
Hydrogen projects have faced delays and cancellations, yet a pipeline of approved ventures still calls for nearly US$8 billion in 2025 investment, almost double the 2024 figure.
