The reduction in yearly announced new volumes is driven by various factors, including a reduction in exploration activity, delays to some key wells with substantial associated pre-drill resources, and disappointments at some highly anticipated wells. According to Rystad Energy’s conservative analysis, global conventional discovered volumes have fallen from 9.5 billion barrels of oil equivalent (boe) announced in 2018 to 6.4 billion boe last year, the lowest in the decade. We expect this year to end above last year in terms of new volumes, with about 5.2 billion boe of oil and gas discovered in 2024 as of the end of August.

Liquids slightly dominate announced new volumes between 2018 and this year, representing about 52% of the announced 68 billion boe of liquids and gas in the period. As global conventional discovered resources continue to diminish, exploration and production (E&P) companies are finding it increasingly difficult to unearth substantial new volumes capable of being commercially developed or fast-tracked to development. As companies increase their venture into deepwater areas, offshore has dominated global discovered liquids, albeit significantly below the levels at the beginning of the last decade. During the period mentioned, above a third of announced new volumes have been found in offshore areas.

The peer group of six upstream majors – ExxonMobil, Shell, Chevron, BP, TotalEnergies and Eni – has, owing to the companies’ technical expertise and financial capability, played a key role in unearthing 20% of total announced new volumes since 2018. The percentage contribution goes up by another 5% if considering only the last three years (2022 to 2024), signifying the group’s relevance during periods of few new discoveries. However, the importance of national oil companies (NOC) and NOCs with international portfolios cannot be ignored, as these are the set of companies with access to the highest number of the blocks and are sitting on billions of yet-to-find volumes.

Despite the dip in announced new volumes, explorers have showcased a relatively high risk-taking appetite and continue to explore challenging prospects in under-explored frontier basins, which will likely play a vital role in unearthing large and super giant new finds. Wells with high predrill volumes in these basins need to deliver if the upstream sector is to see a significant uptick in discovered volumes.

Risk and potential reward play a key role in identifying global exploration hot spots. Over the last decade, there has been a significant shift in terms of where these hot spots are located, pinpointing two significant basin-opening events across the South Atlantic margin. The first was the rise of pre-salt, with the discovery by Petrobras of the Tupi field in the Santos Basin offshore Brazil in 2006, which showcased the industry’s technological advancement and its ability to map reservoir layers beneath thick layers of salt. The Brazilian state-owned giant continues to reap the benefits of its pre-salt hydrocarbons by developing and producing its massive volumes by deploying fleets of floating production, storage and offloading (FPSO) vessels. However, geological uncertainty with pre-salt remains, as has been demonstrated by the failure of analogous West African basins to establish the presence of significant deepwater pre-salt hydrocarbons. The last decade has seen the rise of Guyana as an exploration hot spot, where the ExxonMobil-led Stabroek Block has so far unearthed around 13 billion boe of recoverable volumes.

Diminishing new conventional volumes raise both short-term and long-term concerns for the industry. The yearly drop in announced discoveries is not only hampering E&P companies’ reserves replacement ratios (RRR) but is also creating uncertainty over the availability of commercial and economical projects to be approved. This has led to uncertainty over the ability of the industry to meet future energy demand. As such, the drop in new conventional volumes has led to depletion of the major project pipeline in the long term, posing key challenges to be tackled given the role of hydrocarbons in the energy mix, wherein oil and gas is expected to form about 40% of the global mix by 2050.

Author: 

Palzor Shenga
Vice President Upstream Research
palzor.shenga@rystadenergy.com

(The data and/or forecasts in this column are Rystad Energy's, and the opinions are of the authors.)