BCG: Oil and gas industry needs $350B in annual investment over next 25 years

The oil and gas industry will require approximately $350 billion in annual investment over the next 25 years, Vladimir Rogov, managing director and partner at Boston Consulting Group (BCG), said at the SPE-2025 Caspian Technical Conference in Baku, Report informs.

He stated that the upheavals of recent years have only confirmed the strategic importance of hydrocarbons and access to them.

"Both oil and gas will remain in demand for the foreseeable future. The Caspian region plays a key role in two areas: as a major source of hydrocarbons and as a reliable, independent trade route for their delivery to European and Asian markets," he noted.

Rogov emphasized that today's proven and probable reserves worldwide are insufficient to meet demand in virtually any realistic scenario, with the exception of the virtually unachievable scenario of a complete elimination of emissions. "Therefore, new investments are inevitable. Our industry requires approximately $350 billion in capital investment annually over the next 25 years," he said.

Moreover, over the past five years, oil and gas companies have shifted their focus to shareholder payouts and reduced reinvestment. "If we want to maintain these payouts, pressure on capital expenditures will increase, and competition for investment will intensify. The Caspian region needs to ensure the attractiveness of its projects so that capital flows here, not to other parts of the world," the BCG representative emphasized.

He added that during the energy transition, rates of return are rising, and investments in production are perceived as riskier. Investors demand faster and higher returns, increasing pressure on projects and making technology, efficiency, and industry-wide engagement critical, especially in the Caspian region.

According to Rogov, investment in the Caspian region began to slow at the beginning of this decade. "In the past decade, the share of capital investment in the Caspian was higher than in other regions. Now, however, we are seeing a decline following the completion of major projects in Kazakhstan and Azerbaijan, which have entered the production phase. Investment has fallen to levels 50% below those of the past decade, and will likely be even lower in the next decade," he said.

The expert emphasized that the Caspian region still holds significant potential. "The region accounts for 2% of global oil production and 10% of proven global gas reserves," Rogov added.