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

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.

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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.

Source: IEA
Note: Figures are in million barrels a day and represent declines if investment were to stop.

The outlook matters because there’s little sign of oil demand peaking soon, meaning that elevated output will be needed for years to come. While a global oil surplus is forecast for this year and next, BP Plc this year projected that supply growth outside of the Organization of the Petroleum Exporting Countries from early 2026 would remain largely flat for 12 to 18 months.

“In the case of oil, an absence of upstream investment would remove the equivalent of Brazil and Norway’s combined production each year from the global market balance,” the IEA’s Birol said in a statement.

Its forecast is part of a report that analyzed more than 15,000 fields and how fast their output is declining. 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.

Updates with extra details in second and third paragraphs.