Baku, Azerbaijan, March 5
By Leman Zeynalova – Trend:
The recovery from the historic drop-off in investments in the upstream sector by 25 percent in both 2015 and 2016 has barely started, the International Energy Agency (IEA) said in its Oil 2018 report.
“Investment was flat in 2017, and early data suggests only a modest rise in 2018. This is potentially storing up trouble for the future,” said the report.
IEA analysts believe that an added concern is that investment is overwhelmingly focused on the light tight oil (LTO) sector in the United States.
“Natural production declines are slowing, but more investment will be needed. Each year the world needs to replace 3 million barrels per day (mb/d) of supply lost from mature fields while also meeting robust demand growth. That is the equivalent of replacing one North Sea each year,” said the report.
Investment in maintaining current production is one challenge, investing in future demand growth is another, according to the report.
“Our analysis shows that discoveries of new oil resources fell to another record low in 2017, with less than 4 billion barrels of crude, condensate and NGLs found. In the past three years we have seen oil production from China, Mexico and Venezuela fall by a combined 1.7 mb/d as a consequence of lower investment. China’s decline has slowed; in Mexico, impressive reform proposals are being developed and production could return to growth by 2023,” said IEA.
Meanwhile, Venezuela remains a wild card, the analysts believe.
“In the twenty years since former President Chavez first came to power, oil production has more than halved to below 1.6 mb/d, and capacity will plunge by nearly 700 kb/d more by 2023, a major acceleration of the decline we expected a year ago,” said the report.
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