$3.5t energy splurge
13 July, 2017, 12:00 am
INVESTMENTS in electricity surpassed those in oil and gas for the first time ever in 2016 on a spending splurge on renewable energy and power grids as the fall in crude prices led to deep cuts, the International Energy Agency (IEA) said on Tuesday.
Total energy investment fell for the second straight year by 12 per cent to $US1.7 trillion ($F3.5t) compared with 2015, the IEA said. Oil and gas investments plunged 26 per cent to $US650 billion ($F1.3t), down by over a quarter in 2016, and electricity generation slipped 5 per cent.
“This decline (in energy investment) is attributed to two reasons,” IEA chief economist Laszlo Varro told journalists.
“The reaction of the oil and gas industry to the prolonged period of low oil prices which was a period of harsh investment cuts; and technological progress which is reducing investment costs in both renewable power and in oil and gas,” he said.
Oil and gas investment is expected to rebound modestly by 3 per cent in 2017, driven by a 53 per cent upswing in US shale, and spending in Russia and the Middle East, the IEA said in a report.
“The rapid ramp up of US shale activities has triggered an increase of US shale costs of 16 per cent in 2017 after having almost halved from 2014-16,” the report said.
The global electricity sector, however, was the largest recipient of energy investment in 2016 for the first time ever, overtaking oil, gas and coal combined, the report said.
“Robust investments in renewable energy and increased spending in electricity networks, made electricity the biggest area of capital investments,” Mr Varro said.