Rystad Energy - Energy Knowledge House
Rystad Energy - Energy Knowledge House

press release

Big E&P spending still needed, but fields with break-even above $60 are priced out

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Energy projects that need oil prices above $60 per barrel in order to break even risk being uncommercial going forward, according to Rystad Energy. However, massive investments in exploration and sanctioning are still needed to meet growing global demand.

As the world transitions to a less carbon intensive future, Rystad Energy forecasts that the global inventory of already discovered oil fields with a breakeven oil price of below $60 Brent (real) is sufficient to meet demand growth and offset declines from maturing fields until around 2027. From that point on, however, additional volumes from not-yet-discovered fields will be needed in order to meet total liquids demand.

Global exploration efforts must therefore continue in order to discover those resources in the first place, even under a scenario whereby oil demand peaks in the late 2020s. In addition, operators will need to empty their portfolio of unsanctioned commercial discoveries over the coming years.

“This means that although we need to discover additional resources, only fields with breakeven prices below $60 Brent are likely to be commercial through 2030 and likely towards 2040,” says Audun Martinsen, head of oilfield services research at Rystad Energy. “If the global E&P industry were to fail to discover sufficient resources at such breakeven prices, global demand would need to be satisfied by utilizing otherwise uncommercial fields, or transition more quickly to a different power mix”

Greenfield oil and gas project commitments to 2030 USD billion only oil projects with breakeven price below $60 brent Rystad Energy ServiceCube December 2019

Rystad Energy, the independent energy research and consulting firm headquartered in Norway with offices across the globe, tracks all new oil and gas project commitments globally – so-called greenfield sanctioning. These are the projects that are planned to meet future oil and gas demand.

In 2019, oil and gas projects representing around $200 billion of investments were sanctioned. In 2020 Rystad Energy forecasts as much as $225 billion worth of projects will be sanctioned, driven primarily by gas projects, and with $50 billion coming from onshore liquefied natural gas (LNG) facilities. Offshore project sanctioning is likely to surpass $100 billion in 2020.

“With Brent oil prices at $60 per barrel, E&P operators are able to sanction oil and gas projects worth about $200 billion per year, driving a lot of interesting contract awards and elevating optimism among oilfield service providers,” Martinsen observed.

While most offshore projects sanctioned this year have breakeven prices below $40 per barrel, we foresee breakeven risk for the period 2020 through 2023. During this four-year period, offshore projects worth $25 billion, or almost 7% of the total, have a breakeven price above $60 per barrel.





Audun Martinsen
Head of Oilfield Service Research
Phone: +47 24 00 42 00

Morten Bertelsen
Vice President, Media Relations
Phone: +47 951 98 742


About Rystad Energy

Rystad Energy is an independent energy research and business intelligence company providing data, tools, analytics and consultancy services to the global energy industry. Our products and services cover energy fundamentals and the global and regional upstream, oilfield services and renewable energy industries, tailored to analysts, managers and executives alike. Rystad Energy is headquartered in Oslo, Norway with additional offices in London, New York, Houston, Aberdeen, Stavanger, Moscow, Rio de Janeiro, Singapore, Bangalore, Tokyo, Sydney, and Dubai.