2023 trends shaping the global oil and gas market

A combination of geopolitical, economic, policy and other factors are shaping the trends in the oil and gas industry in 2023. Energy security and supply diversification issues highlighted by the Russia-Ukraine conflict and post-Covid reopening of Chinese economy, clean energy transition supported by strengthened climate goals, policies and monetary provisions, laid on top of significant underinvestment caused by Covid restrictions will determine the decisions taken by industry executives.

Following years of underinvestment and high oil prices in 2022 upstream companies are entering 2023 with record cash flows. Capital expected to be allocated to hydrocarbon supply diversification projects, investments in low carbon transition as well as shareholder returns. Private players more likely to increase capex in hydrocarbon production diversification and output maximisation. European majors, including BP, TotalEnergies and Shell – will continue expanding their clean energy portfolios. Following years of slow progress, investments in CCUS (carbon capture, utilisation and storage) technologies and hydrogen production likely be given more attention as part of “net zero” emissions goal supported by investment incentives and decarbonisation targets.

Natural gas assets pose an attractive M&A target and investments are expected to accelerate in 2023 following the supply issues from Russia and the EU and US policy move to focus on emission reduction and making the infrastructure cleaner rather than phasing out natural gas.

With uncertainty in feedstock supply and demand for petroleum products on one hand and a growing demand for renewable diesel and fuels (bio-LPG) on the other, many refineries will undergo modifications to include or expand clean energy production lines.