IEA Says World Must Spend $540B a Year Looking for Oil, Gas

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The world needs to spend some $540 billion a year looking for oil and gas to maintain current output by 2050 as the pace of declines in existing fields increases, according to the International Energy Agency.

Faster decline rates, in part because of an increased global dependency on US shale, mean that the global oil and gas industry “has to run much faster just to stand still,” the agency’s executive director Fatih Birol said.

The outlook also means that companies will need to tap reserves that haven’t yet been discovered, unless demand shifts away from fossil fuels, for production to remain where it is today in 25 years. It also marks a significant shift in tone for the IEA which, in recent years, has called on major producers to spend more on clean energy.

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Without investment, global supply would fall by the combined production of Norway and Brazil — more than 5 million barrels a day — every year. That amount is around 40% higher than it was in 2010, partly because of more reliance on shale production, particularly from the US, which typically depletes faster than conventional reserves.

While global spending is likely to hit $570 billion this year — enough to keep production at current levels if sustained — the amount would be down slightly from 2024, Christophe McGlade, head of the IEA’s energy supply unit, said on a webinar.

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“The shift to a clean energy economy is picking up pace, with a peak in global oil demand in sight before the end of this decade as electric vehicles, energy efficiency and other technologies advance,” said IEA Executive Director Fatih Birol. “Oil producers need to pay careful attention to the gathering pace of change and calibrate their investment decisions to ensure an orderly transition.”

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