The global oil and gas sector is being forced to spend nearly half a trillion dollars a year simply to keep production steady, as fields decline more rapidly than previously expected, the International Energy Agency (IEA) warned on Tuesday, according to the Financial Times.
In a new report, the Paris-based watchdog said its analysis of 15,000 oil and gasfields revealed growing fragility in output, driven by an increasing dependence on shale resources. Shale fields require continuous drilling to sustain production, making the industry especially vulnerable to investment slowdowns.
Fatih Birol, IEA executive director, said the findings highlight the scale of the challenge. “Since 2019, the oil industry has spent nearly 90 per cent of annual investment — around $500bn a year — just to arrest the decline in existing fields. The industry has to run much faster just to stand still,” he said.
The conclusions mark a shift in tone for the IEA, which last year warned of a potential “staggering glut” of crude and urged producers to reassess their business models. The new outlook may be welcomed by oil companies, which have long argued that sustained heavy investment is essential to maintain global supply.
The report also underscores the geopolitical consequences of field depletion. Without continued spending, global oil output would fall by 5.5mn barrels per day annually — equivalent to the combined production of Brazil and Norway — while U.S. shale production could collapse by as much as 35 per cent within a year of halted drilling, the agency said.
Decline rates also mean future supply will be increasingly concentrated in slower-fading fields in the Middle East and Russia. The IEA projects that the market share of Opec and Russia could rise from 43 per cent today to more than 65 per cent by 2050.
The agency’s findings come as it faces political pressure from the Trump administration, which has accused it of undermining oil industry investment by forecasting peak oil demand by the end of the decade.
