Investments from global exploration and production companies in 2021 are projected to reach around $380 billion, almost flat year-on-year, according to research from Rystad Energy.
Investments from global exploration and production companies in 2021 are projected to reach around $380 billion, almost flat year-on-year, according to research from Rystad Energy.
About 20% or $76 billion of the estimated 2021 investments could be at risk of deferral or reduction, with the remaining amount being categorized in the safer tiers of low and medium-range risk.
Investments may rebound to the pre-crisis level of $530 billion by 2023 if oil prices rise to around $65 per barrel – though Rytsad warned that after the previous market crisis in 2014, annual E&P investments never recovered to the pre-crisis level of about $880 billion and instead settled at $500 billion to $550 billion.
Much of that reduction was due to supply chain and efficiency improvements, leaving little scope for further such reductions this time around, said Rystad. Instead, E&P players are pulling other levers to weather this market downturn, such as deferring infill drilling programmes, projects’ FIDs and start-ups, reporting significant write-offs on stranded assets, and reshaping their portfolios.
‘As E&Ps are also speeding up a transition into low-carbon energy, it is possible that this time, too, upstream investments will not return to pre-crisis levels in the long-term, even if they do recover somewhat over the next few years,’ said Olga Savenkova, upstream analyst at Rystad Energy.
Of the total $380 billion of projected investments, about 60% ($234 billion) is likely to come from producing assets, which have two main spending channels: facility and well capex. Within facility capex, about 38% will be spent on facility maintenance. This is believed to be a low-risk category, as operators were forced to postpone most of their planned maintenance programmes in 2020 due to coronavirus restrictions and lower oil prices. Maintenance work will therefore have high priority in 2021.
Shallow hazard high-resolution pre-stack time migration products will also be available, to aid in shallow drilling hazard analysis, along with gravity and magnetic data for regional basin analysis.
Martin Melhuus, PGS vice-president sales and services for South America, said: ‘Despite the challenges of this year, the support of industry funding for this programme shows there is strong interest in the potential within the Campos Basin. Available fast-track results show great promise and reveal large presalt structures within the available acreage.’
The survey will bring PGS’s coverage in the area to approximately 14,900 km2.
