12 13 In fossil fuel, we are investing less than half of what invested more than 10 years ago, and that is just enough to fight the depletion. We’ve got to maintain a long-term view to meet this ever-growing demand. Oil and gas are depleting resources — we have to grow production for today while replacing what’s taken from the ground. Since the first ENACT, last November, a significant number of new developments have emerged, mainly in the US and China, which are likely to signal a meaningful impact in shaping the future direction for Energy Markets. See Fig. 1 1. Explosive data center growth – with 12 GW of new capacity built in the US alone this year – reigniting utility-scale power generation demand and strong competition for baseload power sources 2. US tariffs and a pullback in green incentives point – points to a slower deployment of solar and batteries, which is set to leave the power system more reliant on gas, as well as slowing down the electrification of transportation. 3. The cancellation of US offshore wind projects – adding to the importance of gas to fill the energy supply gap, while we have seen a renaissance in nuclear and even geothermal 4. A tsunami of new LNG FIDs in the US has unlocked 55 mtpa of new capacity this year alone following the lifting of the ‘temporary pause’ – pointing to a stronger LNG supply outlook to 2030. 5. A global pivot away from clean hydrogen – with 6 mpta of projects halted, as incentives are scaled back amid broader recognition of production inefficiencies and associated costs. 6. China electrifies at pace – with its share of EV sales moving past 50% as the country leverages its dominance in critical mineral supply chains. 7. Record renewables deployment – as China leverages its energy transition manufacturing capacity to increase supplies to its domestic markets (with data centers now mandated to use 80% renewables) as well as redirecting exports away from the US and towards emerging markets. 8. China increases energy ties with Russia, with commitments to the Power of Siberia 2 pipeline as well as new LNG intakes from the Artic LNG 2 project. Current Market Reality Emerging challenges and trends shaping tomorrow’s energy landscape 3 13 Against an increasingly uncertain long-term outlook, the industry faces short-term challenges. Oil demand growth is structurally slowing, as we move closer to peak demand, while supply growth remains robust amid a short-term wave of new supplies from non-OPEC+ (mainly Latam). At the same time, OPEC+ is pivoting to a market share strategy, unwinding previous output quota limits. External outlooks suggest a potential period of oversupply in the short term. Consensus forecasts point to a slowdown in non-OPEC production growth in the latter part of the decade as the pipeline of new non-OPEC projects dries up. However, this time there will be no prolific growth in US shale production to make up the gap. Between 2017 and 2025, US production growth has accounted for 70% of global demand growth. As this key engine of supply growth fades, higher investments elsewhere will be required to ensure adequate supplies to markets. With pressure to return dividends to shareholders and buy back shares, the industry needs to carefully navigate challenging short-term conditions while investing adequately to meet future demand amidst competition for capital from other sectors and industries. Unattributed quote Unattributed quote However, this should not distract from the large investments needs that lie ahead. A peak in oil demand is likely to be followed by a long plateau above 100mbpd, which will require continued investments to be sustained, amid increasing decline rates. See Fig. 2 Tsunami of LNG FIDs 55 mpta of new FIDs in 2025 post permit pause US Tariffs & Green Incentives Pullback Slower US solar & battery projects plus EV adoption World Pivots Away from Hydrogen With 6 mpta of projects halted US Offshore Wind Projects Cancellation of projects Explosive Data Center Growth 12 GW of additional capacity reignites utility scale power generation China Increases Energy Ties with Russia With commitment to PoS2 and Arctic LNG exports China Electrifies at Pace Share of EV sales >50% Owns 60-90% of critical minerals supply chain Record Renewables Deployment China redirects energy transition capacity to EMs data centers mandated to use 80% renewables China US 1.2 0.8 1.9 1.6 2.2 1.9 1.0 1.5 2.5 2.0 0 0.5 mbpd Oil Demand Growth (excluding COVID years) Europe ROW -0.5 0.7 0.8 2024 2019 2017 2018 2015 2016 2025 2026 2.2 1.5 1.5 1.8 1.5 0.4 0.4 0.3 0.1 1.5 mbpd - Pre Covid Average 2027 2026 2024 2025 2022 2023 2028 2029 2030 US shale oil production peaking & a smaller pipeline of new projects set to come on line 2026 Surplus: 3.6mbd Non-OPEC Surplus: 1.4mbpd; OPEC addition: 2.2mbpd Non-OPEC+ supply growth (mbpd) Figure 1: 2024-2025 signposts: Figure 2 Source: S&P Global Source: Rystad