PARAMARIBO, SURINAME – Years of underinvestment across the global oil and gas supply chain have created structural constraints that are keeping project costs elevated, according to S&P Global Project Analyst Magda Rodriguez.
Speaking during a Tuesday presentation titled “Upstream at a Crossroads: Navigating Cost, Complexity and Global Shifts” at the Suriname Energy, Oil and Gas Summit (SEOGS) 2026, Rodriguez said the industry is no longer experiencing the sharp cost reductions that followed previous market downturns.
“When we saw the prices declining, the cost didn’t fall at the same time,” she said, noting that several categories of upstream capital costs continued rising even during periods when crude prices softened.
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Rodriguez attributed the trend in part to inflationary pressures that emerged after the COVID-19 pandemic, when economic activity rebounded and demand for services increased rapidly. At the same time, years of underinvestment left shortages of key assets across the supply chain, including rigs, vessels and specialized equipment.
The result has been stronger competition among operators seeking the resources needed to advance projects, placing upward pressure on costs.
She also pointed to growing consolidation within the oilfield services sector. Through mergers, acquisitions and joint ventures, fewer suppliers now control larger portions of the market, giving them greater bargaining power than they held a decade ago.
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“After 2022, what we see is that this supplier side is getting much more power, bargaining power in terms of price,” Rodriguez said.
According to Rodriguez, operators are increasingly directing investment toward resource-rich regions that offer stable investment conditions and large development opportunities. Latin America is among the regions expected to attract a growing share of global upstream spending, supported by major offshore developments in countries such as Guyana and Suriname.
Rodriguez’s explanation suggests the market has entered a new era in which the combination of supply chain constraints, stronger supplier leverage and disciplined capital allocation is a structural feature rather than a temporary cycle.
