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Asia Pacific renewables investment projected to exceed upstream oil capex

Publication Date: 29 May 2019 - By ReachX Team By ReachX Team
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Equity Fundamental Investment Strategies Macro Multi Asset Commodity Asia ex-China Energy

Spending on upstream oil and gas projects in Asia Pacific (excluding China) will be overtaken by renewable energy investment, according to projections offered by a leading energy research and consulting firm. 

Oslo, Norway-based Rystad Energy’s latest bottom-up analysis of regional investments shows that total capital expenditure (capex) in renewable energy will overtake oil and gas exploration and production (E&P) spending in 2020, with contributions from Australia and other Asian countries such as Vietnam, Taiwan and South Korea. 

In Australia, the renewable energy project pipeline is now over double the national electricity market. Only 1% of the country’s solar, wind and utility storage projects is currently owned by oil majors. Rystad Energy forecasts that this is likely to change.     
 
“These countries each have strong pipelines for renewable energy developments of all types, including offshore wind,” says Gero Farruggio, Head of Renewables at Rystad Energy. “And, importantly, most have large targets outlining the inclusion of renewable power sources within their respective energy mixes, with corresponding support policies.”

“By 2020 it is feasible that the majors will be the dominant renewable developers in Australia as they pursue ‘oil and gas’ scale opportunities. Commercial drivers are increasing the desire to ride the ‘solar-coaster’,” Farruggio remarked.

Although Australia still faces the local challenge of transmission losses, which impacts revenues and creates policy uncertainty, investor confidence is high and the country currently has a development pipeline of over 105GW of solar, wind and storage projects, as well as a fleet of ageing coal-fired power stations which will require replacement.

“Upstream companies will lead the charge, building sizeable utility storage, solar and – ultimately – offshore wind portfolios. Solar panels, lithium ion batteries and turbines will soon be conventional segments of Australia’s oilfield services,” Farruggio adds.

Disclosure:

I have no positions in any of the securities referenced in the contribution

I do not use any non-public, material information in this contribution

To the best of my knowledge, the views expressed in this contribution comply with UK law

I agree with the terms and conditions of ReachX

This contribution is for informational purpose and does not constitute investment advice nor is it an offer to sell or buy, nor is it a recommendation for any security.

ReachX Team

 

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