OPINION: While the future of fossil fuels dominates global headlines, oil and gas companies are quietly getting back to post-pandemic business.

High energy prices have boosted balance sheets, giving the industry confidence to open the spending taps and move ahead with stalled projects.

Consultancy Rystad Energy expects global hydrocarbon spending on new schemes to rise 4% to $628 billion in 2022. This will include a 14% rise for natural gas and liquefied natural gas schemes.

Areas of focus are Australia and the Middle East where business is booming through a series of huge — mainly gas — developments.

Spending on greenfield gas schemes Down Under is expected to increase by 33% over the next 12 months and 22% in the Middle East.

There are also predictions that one Canadian and five US LNG schemes will be sanctioned in 2022 as confidence rebounds after the lull caused by Covid-19.

Gas prices hit record highs in Europe this winter, causing financial crisis for some ill-prepared corporate suppliers.

Consultancy Wood Mackenzie expects gas prices could fall a bit this year, although much may depend on whether the Nord Stream 2 Russian pipeline to Europe is commissioned.

Tensions between the West and Russia over the Ukraine could determine what happens with permissions for Nord Stream 2, but operators say a lot more gas will be needed in the future, hence the investment.

Novatek, the operator of Russia’s Arctic LNG 2, has recently received $11 billion worth of funding partly from China to help it complete its ambitious polar project.

Qatar is also spending big on LNG, ploughing ahead with two extensions to the North Field that could be worth $50 billion in service contracts.

The first of the two phases worth $28 billion has already been sanctioned and has led to McDermott International securing a major engineering contract from operator QatarGas.

Meanwhile, Saudi Aramco recently unveiled a host of contracts worth $10 billion to develop its huge Jafurah unconventional gas scheme.

Investments in the project could eventually total $110 billion and Saudi Arabia wants to use it to produce blue hydrogen — derived from natural gas, with most of the carbon dioxide captured and stored — for a new, greener economy.

Gas is being favoured after the COP26 climate talks as a cleaner source of power, but work is also ongoing in the Middle East to decarbonise gas and oil production.

This has led to contracts such as the $3.6 billion one awarded last month by Abu Dhabi National Oil Company to a consortium led by Korea Electric Power Corporation.

Oman’s Ministry of Energy has also recently announced concessions granted to a Shell-led consortium, which could lead to $2 billion worth of onshore gas developments.

Other Middle East oil projects, such as Qatar’s expansion of the Al Shaheen oil field, are also sucking in new investment.

And in the US, alongside the LNG projects, there is a surge of spending going back into the shale fields amid an $85 per barrel West Texas Intermediate oil price.

The International Energy Agency warns new drilling may need to stop to meet the Paris climate goals, but hydrocarbon producers believe a rising population and economic growth justify this current spurt of spending.

(This is an Upstream opinion article.)