Rystad: 2021 May be Worst Year Since 1946 for Oil & Gas Discoveries

Promising offshore finds like the PTTEP/Petronas Nangka-1 well have cushioned the decline (PTTEP image)

Published Dec 21, 2021 10:50 PM by The Maritime Executive

Reflecting reduced investment in E&P in the COVID-19 era, the global energy industry is on track to record its worst year for new oil and gas discoveries since 1946, according to the analysts at Rystad Energy. 

“Although some of the highly ranked prospects are scheduled to be drilled before the end of the year, even a substantial discovery may not be able to contribute towards 2021 discovered volumes as these wells may not be completed in this calendar year. Therefore, the cumulative discovered volume for 2021 is on course to be its lowest in decades,” says Palzor Shenga, vice president of upstream research at Rystad Energy.

No big discoveries have been announced yet in December, and over the course of the year through November, only 4.7 billion boe worth of newly discovered volumes have been reported worldwide. This puts the industry on track to report less than half of last year's total, when - despite the pandemic and a sharp drop in oil prices - oil and gas firms announced 12.5 billion boe worth of new discoveries. 

The monthly average for the year has been low, at about 425 million boe. November was particularly quiet, with just 220 million boe announced, and December has been nearly silent so far. Offshore finds have been the largest source in recent months: Lukoil discovered 75 million boe of oil and gas off Mexico; Thailand's PTTEP and Malaysia's Petronas discovered a promising gas reservoir in shallow water off Baram Province, Malaysia; and Norway continues to yield a steady flow of smaller offshore finds with tieback development potential. 

Rystad chalked up the low overall results to an absence of big discoveries. Large individual finds typically make up an outsize portion of the annual total. Worldwide, just 900 giant oil and gas fields account for 40 percent of all petroleum ever discovered, and each new giant adds 500 million boe or more to the annual total. 

According to Rystad, the global oil and gas industry reacted to the pandemic-induced price crash of 2020 by cutting upstream spending by more than a quarter. That translated to an investment reduction of $145 billion in 2020 and a projected reduction of $140 billion in 2021, and the firm predicts that upstream investments will remain well below previous levels for years to come. For 2022, a healthy share of producers' capex budget increases may simply go to covering the effects of inflation, not drilling extra wells, according to S&P.