IEA calls for more investment in upstream oil and gas

Investment in the global energy sector fell again in 2016, prompting the rich world's energy watchdog to warn that more needs to be done, especially in the Oil & Gas space, to ensure future supplies.

Global energy investment dropped 12% last year to $1.7trn as spending on upstream oil and gas continued to be pared back, according to the International Energy Agency's World Energy Investment report.

Investment in upstream oil and gas was seen stabilising in 2017, but only thanks to the US shale oil industry.

"As the oil and gas industry refocuses on shorter-cycle projects, the need for policymakers to keep an eye on the long-term adequacy of supply is more important. Even with ambitious climate-mitigation goals, current investment activity in oil and gas will have to rise from its current slump," said Fatih Birol, the IEA's executive director.

Similarly, the Paris-based watchdog warned that investment in clean energy generation was not keeping pace with demand growth.

Growth in new wind and solar was being nearly completely cancelled out by fewer final investment decisions for new nuclear and hydropower.

Some of the other trends evident in the report were the increased share of investment being allocated to clean energies, which at 43% set a record high in 2016.

To take note of as well, China overtook Japan as the biggest spender on energy-related research and development as a proportion of gross domestic product.

China was also on course to overtake Europe as the largest investor in energy efficiency within a few years.

On a more positive note, Birol pointed out how outlays on energy efficiency were continuing to rise thanks to strong government policies in key markets.

According to the IEA, last year also marked the first time that spending on the electricity sector overtook investment in oil, gas and coal supplies combined.