2025 Global Oil & Gas Project Spending Outlook

[Intro] (00:00):
Some would say we are at a pivotal moment for the global oil and gas industry — a moment in time where we stand at an intersection of energy security, moderating economic activity and the accelerating push towards decarbonization. On one hand, the industry continues to face headwinds from geopolitical tensions, price instability and supply chain disruptions. On the other, it is under unprecedented pressure to innovate, reduce emissions and adapt to the demands of the energy transition. And so the big question facing us is: are investment patterns shifting, with capital increasingly being directed more towards cleaner fuels and operational efficiency, or is it business as usual?

Shaheen Chohan (01:01):
Welcome to Navigating the Currents of Change. My name is Shaheen Chohan and I lead Global Analytics here at Industrial Info Resources. For over 40 years, we have been providing market intelligence, data analytics and geospatial solutions to those companies involved in the design, the construction and maintenance of plants and facilities across energy, mining and heavy industrial sectors across the world. Now, to help me get to the bottom of some of these questions, I am delighted to be joined by not one or even two of our subject matter experts, but we have four of our regional experts helping us dissect some of those questions. Firstly, I'd like to introduce Gordon Gorrie, Senior VP of Global Research for Oil and Gas, and we have Jesus Davis, our North America head of research. Also joining us, Josef Murr, who's head of oil and gas research in Europe. And Leandro Londero, who is head of oil and gas research in Latin America. Welcome, gentlemen.
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Now, Gordon, if I could kick off the discussion with you — really just let's start top line. What does the current active spending look like across the various regions and geographies that you and your global researchers are tracking? And more importantly, are we continuing to see momentum moving forward?

Gordon Gorrie (02:42):
Thank you, Shaheen. Yeah, I would call it the 40,000-foot view, just to set the scene. And there are two ways that I look at this. The first one is what's in construction today, versus what we looked at this time last year. So basically, I would suggest that the market is neither better nor worse — I think we're about the same as we were last year. So last year we had about just north of 4,000 projects that were under construction, valued at about $412 billion. This year, we're up slightly on the numbers — that's 4,400 to 4,445 projects and about $448 billion. So I mean, it's not a signal to say it's better or worse. But what I'm saying to you is under construction — which is fact, it's been funded, it's in construction at some stage — on that matter, I think we're looking pretty good just now.
Now, as far as looking forward — when we look forward, we're looking at 2026, 2027. And the big picture is that we've got up to $1.66 trillion of projects, potential projects out there. Not all of that will happen, but they're out there. Of which maybe about $989 billion of that could kick off in 2026 and 2027. So I think it's a fairly healthy market right now.

Shaheen Chohan (04:33):
Thanks, Gordon. Now, if we could flip the lens a little bit — we've just heard from Gordon how that spending is distributed geographically. If we could look at it from a more commodity perspective, could you just talk us through — again, the macro-level view — of what does the near-to-mid-term outlook appear to be presenting itself for gas versus crude?

Jesus Davis (04:57):
It really follows in line with what Gordon is saying. When we're looking at expected supply-demand numbers — what the EIA is saying, what the IEA is saying — it's basically flat. For example, if you look at the US, we're looking at a potentially 1% decrease in crude oil production over the next year. The IEA has a more optimistic view when they look at it from a global perspective, seeing an increase of about 1.1 million barrels globally going into 2026. But it's still a pretty moderate picture for crude oil. But when you flip over to gas, that's a little bit different. We're seeing a lot more activity on the gas side, more spending to support that. Although the same thing with the US — demand is relatively flat with the exception of LNG. But overall, with efficiency gains, with decarbonization efforts, with more renewable energy in the market, demand for natural gas in the power sector is actually going down. But it is definitely going to be offset by what's going on in the LNG side. And then the same thing globally — we are seeing an increase of natural gas demand around the world as well, of at least 2% growth now.

Shaheen Chohan (06:13):
Jesus, that seems a little contrary to some of the market sentiment, which is thinking that electricity demand in the US is increasing — it used to be sub-1%, but it's now definitely increasing year on year. And a lot of that demand is coming from the data center sector — very power-hungry, very energy-intensive pieces of infrastructure. And a lot of that power provision is going to lean on natural gas. Do we think that US natural gas demand will increase over time?

Jesus Davis (06:44):
I definitely do think it will increase over time — just don't think it's going to happen all at once. These data centers, they're getting built very, very quickly — they get announced and it seems like it's already in operation the next week. But over the next few years, we are definitely expecting to see significant growth in more stable power generation facilities, and most of those are going to be filled by natural gas. There's also talk about utilizing SMRs and things like that, but renewables will not be as effective for powering data centers 365 days, 24 hours a day.

Shaheen Chohan (07:25):
Now, Josef Murr, I'd like to bring you into the discussion. Obviously, Europe continues to be a big contributor to the oil and gas market, albeit not on the scale of Russia, the Middle East and the US. But it's certainly a big consumer of both crude and, as we've just heard, natural gas. And it's certainly a noteworthy player in the downstream refining sector. Could you just shine a little bit of light on what does the outlook for Europe appear to be trending over this near to mid-term?

Josef Murr (07:57):
Thank you. I would say that the overall outlook for European oil and gas remains cautiously solid. We need to distinguish, however, between traditional fossil fuel investment and energy transition-related projects. The fossil fuel-related investments still play the dominant role and remain steady. We still see a lot of activity, for example, in the UK and Norwegian North Sea. Some sectors even see increased investment due to geopolitical risks — for example, gas storage facilities or LNG import terminals. Investment related to the energy transition — including hydrogen infrastructure or carbon capture and storage — is expected to grow steadily. However, this sector suffers from policy and regulatory as well as market uncertainties, meaning that the growth in investment in those sectors is relatively slow.

Shaheen Chohan (09:01):
Thanks, Josef Murr. Now, we obviously saw a theme playing out in Europe around a number of oil and gas majors committing quite heavily towards CapEx — the pivot towards pushing more budget allocation towards green initiatives. But I guess most recently we have seen something of a U-turn with a number of these oil and gas majors now sort of pulling back on some of those earlier commitments. Are oil and gas companies, certainly in Europe, still investing in initiatives to lower greenhouse gas emissions? Or is it that these sorts of investments have now just become business as usual?

Josef Murr (09:36):
There is still significant investment planned for specific sectors, including carbon capture and storage or the green hydrogen infrastructure. However, overall what we are seeing is that major European companies like BP, Shell, Eni, TotalEnergies or Equinor have all significantly lowered their planned investments in renewables and other low-carbon business segments compared to previous projections. The bulk of their investment capital is still directed towards conventional hydrocarbon production. We really see a dual approach of maximizing short-term profit from those fossil fuel projects, alongside some selected investment plans into green energy projects.

Shaheen Chohan (10:29):
Now, Gordon, back to you. There is always this eternal debate around the timing of peak oil. Don't worry — I'm not going to press you on when you think this may indeed occur. But do you think the continued growth in electric vehicles is going to start to impact the future outlook for crude oil demand?

Gordon Gorrie (10:48):
Good question, sir. Yes — and I know. Now when I look at these things, I kind of look at the numbers. 67% of the barrel of oil goes to transportation — that's the fact. Of that 67%, another 43% of that is gasoline, petrol, etc. And then 20% of that again is diesel. So a good proportion of the barrel right now goes into some form of transportation. I think it's a long way off before you see a significant change to that.
And when you look at the EV market — I can only at the moment state what I know from the US point of view — so far this year, about 9% of newly registered cars here in the US are EVs. But when you look at it on the road, it's only 2% that are EV vehicles. So it's a long way to go before it really takes off here in the US. Different story worldwide — apparently this year, the estimate is about 25% of newly registered vehicles worldwide, headed up big time by China and Europe. And so based on those facts, I think it's still a long way off before EVs affect the consumption of crude oil for cars or vehicles on the road. So quite some time off.

Shaheen Chohan (12:42):
Well, Josef Murr, if I could bring you back into the discussion — you just heard from Gordon that obviously Europe is a big player, a major market for EVs. Are you seeing any kind of impact or bearing on future crude demand across Europe based on this increase in electric vehicle purchases and adoption?

Josef Murr (12:49):
Europe is indeed a growing market for electric vehicles, with nearly 1.2 million battery electric vehicles sold in the first half of 2025 alone. In addition, domestic heating systems based on heating oil are slowly being replaced with new ones based on electricity or biofuels. As those shares are growing, this will also have a growing impact on crude oil demand. The most solid part of crude oil demand going forward, therefore, is expected to come from the petrochemical sector, as petrochemical production cannot be as easily decarbonized as road transport or domestic heating, and therefore will rely on crude oil for the foreseeable future.

Shaheen Chohan (13:49):
Gordon, coming back to you — could we talk a little bit about the role of offshore and how that plays in the current outlook? For many years you've both been sort of predicting the return of offshore investment activity. Has this actually materialized? Are we now seeing higher volumes of offshore spending being committed? And is it just the Gulf Coast, or are we seeing offshore developments elsewhere in the world?

Gordon Gorrie (14:19):
Yeah, I thought you would bring this up — we've talked about this before and you know where my background is, so I was kind of expecting this. Offshore has never gone away. It's maybe not been in the spotlight over the last 5 or 6 years, but it's never gone away — it's played on, it's still going. Technology today is making offshore really more exciting and I think worthwhile for the majors to keep on developing.
So if I look at it just now, offshore-wise, we are tracking well over 5,000 — probably 5,800 — offshore projects worldwide, about $400 billion of that. So I think it's still quite healthy. If you were to put me on the spot on where the hotspots are — I would suggest Latin America right now: Guyana, offshore Brazil, etc. The Middle East is picking up considerably with the redevelopment offshore, revitalizing fields and modern fields. Africa, both on the West Coast and on the East coast. And lastly, surprising to me, we're seeing an uptick in Southeast Asia — a very mature market, but they are going gung-ho with redeveloping mature fields with tie-backs etc. So it's never really gone away — that's my honest answer.

Shaheen Chohan (15:49):
And Jesus, I guess the current Trump administration is very supportive of Gulf of America offshore development. So we've seen improvements in the acceleration of lease sales. I assume this is all feeding into that sort of elevated momentum that we're seeing now, right?

Jesus Davis (16:07):
Well, the Gulf is essentially flat. We're still seeing the same amount of production that we've consistently seen — we've gotten close back to 2 million barrels a day of production out of the Gulf. And a lot of the spending is to really replace barrels, to keep us at that level — not really to increase production, but to maintain production at around 2 million barrels. So yes, the Trump administration has opened up leasing and tried to make things easier as far as developing new prospects, but really we're seeing a lot of that money reinvested into the existing facilities — increasing efficiency and a lot of tie-backs. We're seeing a lot of adoption of technologies that were really developed overseas in Europe and being put in place in the Gulf of Mexico. But even with these new leases, Shaheen — I mean, you're talking about 5 or 7 years out before you actually see production from those leases. There's a lot of development work to be done before you get your first barrel out of these areas.
One thing I should have mentioned earlier is one element that tends to get forgotten, but there are lots of companies involved: this is decommissioning offshore. Through 2030, there are about 960 decommissioning projects worth about $17 billion — quite a significant market that probably is slightly under the radar for a lot of people, but is significant.

Shaheen Chohan (17:42):
Now, I do want to stay with the US before we take a deeper look at some of the other geographies. Obviously President Trump is very supportive — very positive sentiment, a lot of strong rhetoric around hydrocarbon activity, big focus on energy independence, and obviously this war cry or instruction: "drill, baby, drill." Are you guys actually seeing some of that enthusiasm starting to translate into more upstream capital investments?

Gordon Gorrie (18:21):
I'll start then — you know my viewpoint. "Drill, baby, drill" is fine, but is the market there right now for these companies to invest significant money into drilling? And the reason I say that is the current low oil price. I'm sure that the companies, especially here in the Permian, are spending their money on developing what they've got — not new drilling particularly. They're probably going to do a lot of completions. So it's easy to say "drill, baby, drill," but the market actually decides what companies do. So I'm not convinced.

Jesus Davis (19:01):
And I guess to add to that — two points. When you look at the crude oil prices now, versus what the forecast is, it's not getting better. There's no incentive to drill. There are some forecast ranges anywhere from like $54 a barrel to maybe $75. And that $75 is an outlier — there have also been some outliers on the low end below $50 a barrel. If we're anywhere in that $50 to $60 barrel range, it's hard to incentivize any additional drilling. So like Gordon said, it's really dictated by the markets — these companies are in a position to make money. If they're not making money drilling holes, they're not going to do it.
The second thing I would add — just recently the Dallas Fed came out with their survey of some of the oil producers, and the producers are basically saying their input costs are higher, their operating costs are higher, and they're expecting them to go up. And because of that, obviously, if your costs are higher to produce the same number of barrels, with that $50 to $60 oil price, if it's already costing you more to produce a barrel and your costs are going up, it makes less sense to continue to drill more. They are going to maintain what they have and keep things going. But right now, don't see a big uptick in upstream activity — really just a lot of trying to maintain the current level. And I think even the EIA forecasts are expecting a 1% decline in oil production in the US — we'll lose around 140,000 barrels, still be in the 13 million barrel range, but don't see a whole lot of additional growth.

Shaheen Chohan (20:39):
And what's causing this cost increase? Is it labor? Is it some of these tariffs now spilling into cost of pipe? What's causing it?

Jesus Davis (20:51):
Material costs are significant in that matter, because in the oil and gas world, it doesn't matter where it is — this stuff comes from all over the world: the material, the equipment, etc. So yes, I think it's mainly the material cost.

Shaheen Chohan (21:11):
Josef Murr, I'd like to come back to you regarding a comment that Gordon made about offshore. Obviously, the North Sea is another one of those big major offshore markets. What types of capital spending are we seeing, and is it the UK and Norway — obviously the two biggest players — are they committing any additional levels of CapEx going forward?

Josef Murr (21:36):
Overall, the North Sea remains a major offshore market with diverse types of spending going on or planned, including oil and gas developments, offshore wind, carbon capture and storage infrastructure, or green hydrogen projects. Regarding oil and gas, both the UK and Norway are committing significant capital expenditures going forward, including towards drilling, production, platform upgrades and infrastructure tie-backs. Especially Norway's oil and gas sector is in a strong development phase, with substantial spending on subsea tie-backs to existing infrastructure, as this is a cost-effective way to increase oil and gas recovery. Norway is expected to lead the global subsea tie-back market in 2026. The UK offshore market, compared to Norway, is more mature, whereas Norway still has sizable greenfield developments due to its large reserves. Investment in the UK is focused primarily on maintaining production from depleting reservoirs. There is also some investment towards subsea tie-backs, however those projects tend to be smaller and fewer in number compared to what we are seeing in Norway.

Shaheen Chohan (22:56):
Leandro, apologies we haven't involved you in the discussion earlier, but I do have a question specific to offshore for you. Gordon, as you heard earlier, said the Latin American market is a big offshore market with a lot of offshore potential. Has there been a significant uptick in offshore oil and gas capital investments in Latin America? Could you expand on some of the themes that you're seeing and what type of investments do you think are going to be moving forward?

Leandro Londero (23:26):
Hello, everyone. Thank you for the kind introduction — it's a real pleasure to be here with you today. As for your question, the short answer is yes. The growth is very real, and it's quite concentrated geographically because most of what we have seen in 2024 and 2025 has been driven mainly by Brazil and Guyana.
For Brazil, we need to mention that deepwater and ultra-deepwater production has continued to rise, with the South Field now making up almost 80% of national supply, while total crude oil output is around 3.8 million barrels per day. The competitive prices of the pre-sold crude, combined with the strong geological knowledge that Petrobras currently has of the basin and the improvements the operator has been making on extraction technology, have positioned the Brazilian offshore industry as one of the most competitive sources of new barrels worldwide.
On the other hand, Guyana shows a different but equally strong trend. The country moved from discovery to production unusually fast over the past few years, and output has been growing steadily. By the end of 2025, the target is to reach around 780,000 barrels per day, and projections suggest it could even exceed 1 million barrels per day by 2030.
Given this context, we could say that for Latin America, offshore activity is expected to remain elevated at least through 2028, with multiple significant projects already under construction for these two countries. On top of that, IIR is currently monitoring more than $24 billion in offshore projects scheduled to move into construction through 2030, which indicates a continued momentum for offshore development in the region. But of course, we need to keep in mind that operators, especially in Brazil, are currently leaning toward lower-risk developments such as tie-backs and unit revamps, rather than deploying new FPSOs, which had been the main driver of investment in recent years.
To close my answer, I also want to highlight that despite the global uncertainty the industry is facing as a result of the energy transition, the search for new reserves and exploration activity remains quite dynamic in the region, especially in Guyana. Brazil shows a different scenario — since 2024, it has marked one of the lowest levels of exploratory drilling in recent years. But the country still maintains a broad portfolio of blocks and significant investment programs that point to a promising outlook for future activity.

Shaheen Chohan (26:58):
Leandro, I do want to stay with you. Argentina seems to be leading the way at the moment as far as onshore oil and gas activity. How far out do you see this activity remaining? And where are some of the current hotspots?

Leandro Londero (27:10):
Oh, yes. Argentina is currently leading the regional onshore cycle, positioning itself as a global energy player, with Vaca Muerta of course at the center of this transformation. After years of progress, the development of new gathering and transportation pipelines is unlocking the full potential of this world-class shale formation. Today, more than 60% of the country's total oil output already comes from unconventional wells in Vaca Muerta. And it's important to highlight that Argentina's main driver has been achieving highly competitive crude oil prices — around $40 to $45 per barrel — thanks to the improvements made in drilling and extraction processes in Vaca Muerta.
Regarding numbers and figures: as of July 2025, national oil production is above 800,000 barrels per day, and the current outlook points to achieving the 1 million barrels per day plateau in the next 2 or 3 years approximately. Regarding natural gas, output is running close to 5.6 billion cubic feet per day, and if the addition of gas transportation and liquefaction terminal projects move forward as planned, production could reach about 7 billion by 2028 — and in a very positive scenario, it could rise to around 8.8 billion by 2030, which would represent an increase of more than 50% in total gas production.
Another key topic in Argentina is the country's new energy policies. The government has implemented a 30-year pro-investment stability regime known as RIGI in Spanish, which has enhanced the viability of capital-intensive energy projects. In addition to that, a dedicated legal framework for LNG projects has been established, which provides long-term stability and export authorization for these kinds of projects. The combination of Vaca Muerta's potential and the current political framework has created an opportunity for Argentina to position itself as a future LNG exporter. Two LNG units have already been sanctioned and are expected to come online in 2027 and 2028, with a combined capacity of 6 million tonnes per year of LNG. Looking ahead, the country aims to reach 18 million tonnes per year of LNG by the end of the decade, through the addition of another 3 or 4 extra liquefaction vessels — although those projects have not yet received a final investment decision.

Shaheen Chohan (30:10):
Jesus, back to you. You've been researching the Canadian oil sands market now for a number of years, and I guess you've seen it go through a number of cycles — a lot of highs and a lot of lows. The biggest adjustment that we've seen a few years ago was a number of the IOCs, a number of the oil majors, actually exit the Canadian oil sands market. But I guess it's starting to come back in favor a little. What does the current outlook present itself like?

Jesus Davis (30:47):
Yeah, it's back in favor a bit. The majors are not re-entering — it's primarily Canadian companies, with the exception of Imperial Oil, also known as Exxon or owned by Exxon. But other than that, they are primarily Canadian companies that are really driving the whole sector. We've seen two big projects come online earlier this year. But looking out to the future, there's nothing that's been sanctioned yet to begin construction or move forward over the next 12 months. Where we are seeing money being deployed is a lot of smaller projects — debottlenecks, well additions, mainly efficiency upgrades in those existing facilities. And then starting to see some acquisitions — I think that's where we're seeing some of these companies develop their capital, trying to acquire smaller players in the market and just be more efficient, a larger company, and be more efficient with their overall capital expenditures.

Shaheen Chohan (31:45):
In the past, I think pipeline takeaway capacity was a big issue for many of the Canadian players. Has that been resolved? Is new pipe being laid? Is it operational?

Jesus Davis (31:51):
Well, obviously we saw the Trans Mountain expansion come online, and that definitely helped the Canadian markets. And that was what really gave a lot of people hope — or a lot of optimism — that there were going to be new projects being developed, because there was another outlet out to the West. And we've even heard talks about other pipelines being built to continue to diversify from one customer. But we haven't seen those projects materialize yet. And even the Trans Mountain pipeline — it's not completely full, it's getting there. With these new projects that have come online, that's definitely going to help. But we haven't seen any actual concrete plans for a new pipeline being proposed, either to the west or to the east. There's talks, but not any definitive plans to build anything new yet.

Shaheen Chohan (32:37):
Now, I would like to kind of switch gears a little and look at the gas markets, and specifically LNG — another market that I know you're very much immersed in. Where is the current concentration of planned spending, and what's driving this momentum?

Jesus Davis (32:55):
LNG — I mean, that's really been the bright spot for the entire market, not only the LNG plants, but going upstream into the pipelines and everything else. But the bulk of the spending geographically in the US is on the Gulf Coast — just continuing to see more and more announcements. And even more specifically, this year — 2025 — has seen the most FIDs in the LNG market, ever. We've seen 55 million metric tons of new capacity approved in the US. That's only second to August last year, when I think it was 25 million metric tons approved. But this year has definitely eclipsed that, and the year is not over — we're still not sure if we're going to see more, but there's potential to see more approvals. And that's again not only going to drive spending in the LNG liquefaction plants themselves on the coast, but it's also going to drive a lot of the need for additional pipelines to get the gas — whether it's from the Permian, whether it's from the northeast or wherever it may be — to keep those plants full.

Gordon Gorrie (33:51):
Yeah, and just to add — going back to Canada: Canada is now a player in the LNG market as well. I think that's one of the sweet spots you're going to see out of Canada — possibly another couple of LNG liquefaction developments, selling across the Pacific, missing out the Panama Canal, etc. And suddenly they've got a good market. But worldwide as well, there are other players in the LNG business. We're seeing quite a bit of spend in Africa and on the East Coast — Mozambique, etc. So as both alluded to before, LNG is still the buzzword. It's a fact — it's the buzzword.

Shaheen Chohan (34:35):
In closing, gentlemen — we're clearly seeing demand for both oil and gas extending some time into the future. Now, big question: how do you see the broader energy transition impact future oil and gas CapEx? Do you think we're just going to continue to see what we've seen for the last few years, or is there going to be some really different composition of capital spending — the makeup of that CapEx? Do you think we'll start to see new types of projects probably grow in volume and size? And do you think we'll see a kind of divergence between the volume of spending between crude markets and gas markets?

Jesus Davis (35:23):
Yeah, I do think we're going to see a change over time. I mean, right now, if you look at our entire database, we're looking at about $2 trillion in capital spending across oil, gas and some of the other sectors — CCS, hydrogen and things like that. And now that $2 trillion — the majority of that is related to gas right now. I think it's one and a half, maybe $1.4 trillion of spending is related to the gas market. The smaller sliver of that we are seeing is again that CCS and hydrogen — a couple of years ago, it wasn't even on the list. Right now it's still not as significant as the big two, but it is growing. Over the past couple of years, I mean, I've seen a 100 to 200% increase in proposed spend in hydrogen and carbon capture and sequestration projects. So definitely expecting to see that change, but not as fast as we thought a couple of years ago. I know there's definitely been a lull.
You've seen the debates just recently — one region is saying it's not really happening, and then you've got the other regions that are saying we're going to decarbonize, etc. So it will come. I think hydrogen is still the better way. But I think we'll have hydrogen at some point — the infrastructure is basically there, we know that we can put hydrogen into a natural gas pipeline. But it's not tomorrow, and we thought that a couple of years ago — but it's slowed down.

Shaheen Chohan (37:03):
Okay. That brings us to the conclusion of our discussion. Just a couple of thank yous before we close. Firstly, I'd like to say big thanks to the folks over at HILCO — thank you for your support today. And of course, to you guys — thank you Gordon, Jesus, Leandro and Josef Murr. Really enjoyed the discussion. Thanks for sharing your views and perspectives today. If any of you have any further questions about any of the points discussed today, then please do reach out to any of us via the contact details you can see here. And of course, a final big thanks to all of you who've joined us today. I hope we have helped you all better navigate some of the currents of change that we're seeing.