BAKU, Azerbaijan, Jan. 14
By Leman Zeynalova - Trend:
Globally, the amount of oil and gas resources approved for development last year surpassed 20 billion barrels of oil equivalent (boe), the highest level seen since 2011, said Espen Erlingsen, Head of Upstream Research at Rystad Energy, the independent energy research and consulting firm headquartered in Norway, Trend reports.
Erlingsen noted that 2019 was the third best year on record, with free cash flow (FCF) reaching nearly $90 billion.
“This represented a slight reduction compared to 2018, but compares very favorably with the previous investment cycle from 2010 to 2014. This shows that the cash flow situation for offshore players is very robust, underlining the point that E&Ps have enough cash in hand to invest in new projects after several years of restrained capital expenditure,” noted the analyst.
Erlingsen said last year saw the approval of 12.3 billion barrels of liquids projects, along with 8.3 billion boe of new gas projects, thus bringing total approved resources to 20.6 billion boe.
“Given that the total amount of offshore production in 2019 was 10.1 billion barrels of liquids and 7 billion boe of gas, this implies a replacement ratio of 1.2 for both oil and gas. The approved volumes in 2019 were 110 percent higher than 2018, and the highest number since 2011,” added the analyst.
“Unsurprisingly, this rising tide of approval activity has carried with it an increase in offshore investments in 2019. Total offshore capex grew by 5 percent versus 2018, with a 7 percent rise in deepwater spending and a 3 percent boost in investments on the continental shelf. For 2020, offshore investments are on track to grow 8 percent, with deepwater up 12 percent and shelf spending up 2 percent. This illustrates that a new offshore investment cycle is in the making.”
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