…Nigeria’s oil discoveries in North missing in global listing
…Value creation reaches $33billion at base price
New global oil and gas discoveries hit record high in a decade last year, spurring value creation from the exploration segment to about $33 billion at the base.
Namibia, Brazil and Algeria stood out in the discoveries as Nigeria is missing despite announcing the discovery of over one billion barrels of oil in the northern part of the country.
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As the world races towards net-zero, fossil fuel has been a major enemy as activists and the International Energy Agency (IEA) asked investors not to fund new oil, gas and coal supply projects if the world wants to reach net zero emissions by 2050.
Wood Mackenzie in a release noted “global oil and gas exploration sector had its strongest year in 2022 in more than a decade.”
The report acknowledged that attempts to lower-carbon, lower-cost advantaged hydrocarbons enabled the sector to create at least $33 billion of value and achieve full-cycle returns of 22 per cent at $60/barrel Brent prices.
The report, “Wood Mackenzie’s ‘Oil and gas exploration: 2022 in review” noted that the number of wells were less than half the numbers during pre-pandemic years, yet the total volume of 20 billion barrels of oil equivalent matched the average annual volumes of 2013-2019.
Director of global exploration research at Wood Mackenzie, Julie Wilson disclosed that the year was remarkable for exploration activities, and stressed that the volumes of discoveries were good, but not stellar.
“However, explorers were able to drive very high value through strategic selection and focusing on the best and largest prospects. The discoveries bring higher-quality hydrocarbons into companies’ portfolios, allowing them to reduce carbon by displacing less advantaged oil and gas supplies while also meeting the world’s energy needs,” Wilson noted.
Despite the much-trumpeted in-land basin reported discoveries in Nigeria, WoodMac noted that much of the listed discoveries are from deepwater.
According to the organisation, the highest value came from discoveries in a new deepwater play in Namibia, as well as resource additions in Algeria and several new deepwater discoveries in Guyana and Brazil, where the latest wave of pre-salt exploration finally met with success.
“The average discovery last year was over 150 million barrels of oil equivalent, more than double the average of the previous decade,” Wilson noted.
The report noted that liquids accounted for 60 per cent of new resources discovered, adding that the development is only the third time in 20 years that liquids made up the majority of new discoveries.
“There is a lot of uncertainty in future long-term demand scenarios for oil. Explorers are accelerating oil exploration to meet near and mid-term demand, while gas exploration is focused in geographies that can supply the gas-hungry European market. In some cases, major leases are approaching expiration of the exploration term and companies are pushing to optimize their value.
“By 2030, fast-tracked development of these new discoveries could deliver 1 million barrels per day in oil and 0.5 million barrels of equivalent per day gas production, generating $15 billion in free cash flow,” Wilson stated.
The report noted that the exploration sector continues to be dominated by national oil companies (NOCs) and Majors, with TotalEnergies, QatarEnergy and Petrobras leading the way in net-new discovered resources in 2022.
Wilson said, “Overall, we saw a year of continued discipline from explorers with exploration and appraisal well numbers largely flat from 2021. However, spending per well increased due to inflationary pressures. Appraisal well numbers increased as companies pushed towards final investment decisions in this short-term window of opportunity.”
