Foreign direct investment (FDI into oil and gas extraction has made a massive comeback this year, as energy companies have deployed capital to expand production within a higher price environment and constraints on supplies from Russia after its invasion of Ukraine.

Between January and August 2022, foreign investors announced 15 greenfield oil and gas extraction projects worth $42bn, which is already equivalent to the total capital expenditure (capex) in the previous four full-year periods combined, according to fDi Markets. That is also more than seven times higher than the $5.4bn of capex committed in 2021.


At this rate, FDI into oil and gas extraction in 2022 is set to reach its highest level since 2009, when $87bn worth of projects were announced. This rise in capital pledges follows years of underinvestment in oil and gas, as the companies have pushed towards decarbonisation and renewables. In the face of public and shareholder pressure, listed multinationals have shifted their investment strategies in line with their net-zero goals. While they have sold upstream fossil fuel assets in recent years, private players, such as UK petrochemical giant Ineos, have bought them up.

fDi Markets figures show that in 2022, there has been a shift towards fewer, more capital-intensive projects. An average of $2.8bn has been pledged to FDI projects so far in 2022, representing its highest level since records began in 2003. 

“Rising commodity prices and rising shale margins in the southern regions of the US have led to an acceleration of capital investment,” says Maxim Manturov, head of investment advice at brokerage Freedom Finance Europe.

The global uptick in FDI is primarily due to huge investment pledges in natural gas, with the overwhelming majority going to the $28.75bn North Field East project in Qatar. There has been a spike in natural gas demand in Europe and Asia this year, due to Russia’s war in Ukraine, which has led to sanctions and restrictions on Russia gas exports. 

However, the largest extraction project tracked so far in 2022 was announced by Dragon Oil, a subsidiary of the UAE’s state-owned Emirates National Oil. It will invest between $7bn and $8bn to expand its production of crude oil in the Cheleken complex, Turkmenistan.

More recently, oil price forecasts for 2022 and 2023 were revised upwards. This was mainly in response to Opec+, a group of 23 oil-exporting countries led by Saudi Arabia and Russia, which agreed on October 5 to lower their collective oil production target by two million barrels per day. 


So far in 2022, the majority of FDI projects into fossil have been expansion projects rather than exploration in new areas, according to fDi Markets, marking the first time since records began in 2003.

“It is clear that oil and gas companies are unwilling to take on the increased risk associated with new exploration, or exploration in environmentally or politically sensitive areas,” wrote Aatisha Mahajan, vice president of analysis at Rystad Energy, in a note in September

The spike in capital flows into fossil fuels has not come at the expense of renewables investment, which is on track to have another record year in 2022. In the first eight months of 2022, green hydrogen and emerging cleantech is the only other sub-sector to have outperformed oil and gas extraction, with 99 FDI projects having mobilised over $100bn in capex commitments worldwide. However, the actual deployment of green hydrogen projects is lacking, with many remaining in limbo due to a lack of clarity over government policy and funding.