Oil and gas outlook 2025: ubiquity and utility in modern life make them a prudent investment choice
It is true that we must move rapidly to newer, greener technologies to address the challenges on the horizon posed by climate change.
But it’s also true that – in a world where energy demand continues to expand, thanks in part to the heavy needs of the nascent artificial intelligence (AI) industry – the legacy oil and gas sector is not going anywhere just yet.
The sector remains a cornerstone of the global economy, providing essential fuels for transportation, power and the production of petrochemicals used in everyday goods like plastics, rubber and fertilizers.
Despite a global push toward renewable energy and slowing growth in major energy markets like China, the industry's place in developed and developing economies is locked in for the foreseeable future.
The preoccupation of many governments around the world is ensuring reliable baseload electricity and energy sovereignty during uncertain geopolitical times; maintaining data centres and networks, and fuelling technological growth – including the growth of the renewable and green energy sector.
Range of investment options
The sector offers a range of investment options, from pure-play exploration and production (E&P) companies and midstream operators to integrated oil majors that span the entire value chain.
Australia's significant role as a major exporter of coal, gas and oil cements its energy sector's prominence, with many large ASX-listed companies offering relative stability and attractive dividends.
Oil prices remain volatile, with global dynamics such as OPEC+ decisions to cut supply adding uncertainty to the market.
Despite these challenges, industry titans have adapted to thrive throughout cycles, employing strategies like capital discipline, focusing on financial health and transforming business models to address climate change.
Many oil companies are pivoting toward greener operations, balancing traditional fossil fuel production with sustainable initiatives.
Technology and AI, reliant on these fuels for maintenance, are also being deployed to enhance operational efficiency, contributing to the sector's evolution in a rapidly changing energy landscape.
While the energy sector rebounded strongly in 2022 following the pandemic-induced slump, it underperformed in 2023 compared to the broader S&P 500 index. However historical performance highlights the sector’s potential for strong returns during market downturns.
Although identifying strong opportunities in the oil and gas sector can be challenging, a diversified investment portfolio should include exposure to this critical industry.
Here are some oil and gas stocks to watch in 2025:
Buru Energy
In 2024, Buru Energy Ltd (ASX:BRU, OTC:BRNGF) concentrated its efforts on advancing the Rafael Project, which it sees as the foundation for long-term cashflows.
Key achievements included progress in Rafael Project partnerships and gas/liquids offtake negotiations, with commercial agreements targeted for early 2025.
Enhanced subsurface imaging also bolstered confidence in the project’s resource potential, laying the groundwork for planned 2025 activities to optimise well productivity.
The company streamlined its operations by focusing on prime areas within the Canning Basin, surrendering non-core permits to reduce its footprint by 60%.
Additionally, Buru advanced plans to divest subsidiaries 2H Resources and Battmin, with sales expected to conclude in the first quarter of 2025.
With a sharpened strategy and strengthened resource base, Buru enters 2025 well-positioned to finalise commercial agreements, resume Ungani oil production and drive value creation for shareholders.
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