Ukraine war boosts global FDI into natural gas

Since the Ukraine War has forced Western nations to explore alternatives to Russian gas, investment in the development of natural gas resources has increased significantly in the first half of the year.

According to data from greenfield investment tracker fDi Markets, nine foreign direct investment (FDI) projects with a combined value of almost $25 billion were announced in the first half of 2022.

When investors announced two natural gas extraction projects worth $5.05 billion in 2021, the full year’s data were higher than the volume of natural gas investment in the first half of this year.

“The new liquified natural gas projects are driven mainly by a short-term increase in natural gas demand in Europe and Asia, due to Russia’s war in Ukraine and ensuing sanctions, and restrictions placed on Russian gas exports,” Rystad Energy said in its August 24 press release.

In the first half of the year, Qatar hosted the vast majority of announced FDI projects for the extraction of natural gas. The $28.75 billion North Field East (NFE) project, which aims to increase the country’s extraction and liquefaction capacity, was carried out by QatarEnergy, the state-owned company of the nation, through the signing of five partnerships with significant international oil companies. Among the international partners are TotalEnergies of France, Eni of Italy, ConocoPhillips and ExxonMobil of the United States, and Shell of the United Kingdom.

According to OECD data, Qatar has the third-largest global natural gas reserves, behind Russia and Iran.

Beyond the NFE project in Qatar, Western investors also announced gas projects in nations like Israel, Norway, Australia, and New Zealand. These announcements strengthened an emerging trend in which investors from developed nations are increasingly inclined to conduct business with counterparts in other developed nations in order to reduce geopolitical risks.