In 2024, the oil and gas industry is poised for a year of strategic recalibration, with capital expenditure (CAPEX) decisions reflecting a nuanced balance between growth, sustainability, and operational efficiency amidst evolving market dynamics.
Chevron has announced a $16 billion CAPEX budget for 2024, highlighting a strategic focus on upstream projects, particularly in the U.S., including significant investments in the Gulf of Mexico. This allocation underscores Chevron’s commitment to bolstering its upstream portfolio while also navigating the challenges and opportunities of the energy transition.
Globally, the oil and gas sector is expected to experience a deceleration in CAPEX growth in 2024, with a notable shift in investment strategies. National oil companies (NOCs) are increasingly focusing on low-carbon initiatives alongside their traditional upstream activities, particularly in the MENA and Asia regions. This twin-track approach aims to align with global decarbonization goals while ensuring energy security and operational resilience.
Wood Mackenzie emphasizes that 2024 will be a pivotal year for the industry, marked by significant strategic decisions. NOCs are projected to intensify their efforts in both expanding upstream capacity and advancing low-carbon ambitions. The emphasis on sustainability is expected to drive increased investments in emissions reduction, particularly methane, highlighting the industry’s commitment to improving its environmental footprint.
The investment landscape in 2024 will also be influenced by geographical and sectoral shifts. China, the UAE, and the UK are expected to lead in CAPEX growth, with the UAE’s investment surge driven by major projects like the Hail and Gasha natural gas project. Offshore wind installations are set to contribute significantly to the overall investment increase, with 2024 marking a notable year for the installation of larger wind turbines, demonstrating the industry’s push towards more efficient and higher-capacity renewable energy sources.
In summary, the oil and gas industry’s CAPEX strategy for 2024 reflects a complex interplay of growth ambitions, sustainability commitments, and the need to adapt to a rapidly changing energy landscape. With a focus on strategic investments in both traditional and renewable energy projects, the industry is positioning itself for resilience and sustainability in the face of evolving market demands and regulatory environments.
