BAKU, Azerbaijan, May 6
By Leman Zeynalova – Trend:
Big Oil (ExxonMobil, BP, Shell, Chevron, Total and Eni) lost 15 percent of its stock levels in the ground last year, with remaining reserves set to run out in less than 15 years – unless the group makes more commercial discoveries, and fast, Trend reports via Rystad Energy.
The proven oil and gas reserves of Big Oil are falling at an alarming rate, as produced volumes are not being fully replaced with new discoveries, the company warned.
“The task is becoming more and more challenging as investments in exploration shrink and success rates slump. The declining proven reserves could create serious challenges for Big Oil (ExxonMobil, BP, Shell, Chevron, Total and Eni) to maintain stable production levels in coming years. This would in turn cause revenue to dwindle and pose a major threat to the financing of the group’s energy transition plans
Big Oil saw its proven reserves drop by 13 billion barrels of oil equivalent (boe) in 2020 as the companies took large impairment charges, and this year’s exploration has not come off to a great start either. The industry’s global first-quarter discovered volumes totaled 1.2 billion boe, the lowest in seven years, as high-ranked prospects failed to deliver and successful wildcats only yielded modest-sized finds,” said Rystad Energy.
The company believes that the collapse in crude oil demand and prices due to the Covid-19 pandemic and an increased focus on capital discipline has led to investment cuts that could aggravate the challenge of many major operators as they strive to boost their proven reserves. Even for European majors, which are increasingly focusing on the energy transition, business models will continue to be dominated by the sale of oil and gas.
“The ability of Big Oil to generate future revenues will continue to depend on the volume of oil and gas the companies have at their disposal to sell. If reserves are not high enough to sustain production levels, companies will find it difficult to fund expensive energy transition projects, resulting in a slowdown of their clean energy plans,“ says Rystad Energy.
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