An expected drop in investment of 21% in 2009 on last year will come as a result of more than 50 major oil and natural gas projects around the world being cancelled or delayed by at least 18 months since October, said the IEA.

The IEA estimates that budgeted spending on oil and gas exploration and production will total about $375bn this year, down about $100bn from a year ago.

Advertisement

The energy adviser to 28 major energy consuming nations also said oil demand is expected to rebound next year, following two consecutive years of decline. It also said that failure for oil production to keep up with a rising demand could drive up oil prices and hinder global economic recovery.