According to OPEC, the industry, despite growing demand, is not investing enough in new oil and gas supplies
Last year, oil and gas discoveries fell to a record low of 5 billion barrels of oil equivalent, while exploration costs nearly doubled. This was revealed by the Gas Exporting Countries Forum (GECF), according to which 60% of the total 5 billion barrels are made up of new oil discoveries, while the rest are gas discoveries.
OIL AND GAS DISCOVERIES DROPPING
This volume – writes Charles Kennedy on Oilprice – compares itself with the new discoveries of 10.5 billion barrels of oil equivalent of the previous year, in support of OPEC’s theses, according to which the industry, despite the growing demand, does not is investing quite a bit in new oil and gas supply. OPEC attributed this trend to the discouragement of investments by analysts and governments, in favor of the transition.
The cost issue most likely also played a role in the lower investment rate. The GECF reported that, in 2023, the cost of exploration per barrel of oil equivalent increased to $5.30 for natural gas, up from $2.60 the previous year.
EXPLORATION COSTS INCREASE FOR OIL
For oil, exploration costs also increased considerably, from $3.50 per barrel of 2022 oil equivalent to $8.80 per barrel. This may be due to the areas where most new discoveries occur: in deep-water offshore blocks. According to the GECF, 41% of new discoveries last year were made in ultra-deepwater and another 30% in deepwater sectors.
OIL AND GAS DISCOVERIES IN 2023
Regarding geographic distribution, last year the majority of new oil and gas discoveries were made in Asia, at 32%, followed by Latin America, which accounted for 21% of all new discoveries. In third place are Europe and Africa, with a share of 11% each.
Higher exploration costs and challenges in finding new oil and gas could further discourage investment growth in the sector, increasing fears, now regularly expressed by OPEC, of an imminent structural deficit on oil markets, while demand for crude oil remains on a high growth path.
