Moderated by Rystad Energy VP, Account Management, Joy Talk, speakers from Rystad Energy included Aditya Ravi, SVP Upstream Research; Espen Erlingsen, Partner, Upstream; Palzor Shenga, VP, Upstream Research; and Olga Savenkova, Senior Analyst, Sustainability Research.
On the field development side, total greenfield investments have dropped since 2015 highs, experiencing a recovery which was shortly followed by another drop due to the COVID-19 pandemic. However, in 2022, levels began to recover again, albeit slowly.
“In 2022, strong commodity prices resulted in subsequent growth and investment. However, in 2022, greenfield capex also dropped by 18%. Companies have in general proceeded with caution in upstream given the previous downturn and shift with the energy transition. We will now look at the companies in terms of total resources started in 2022. CNOOC brought the most fields online, followed by Shell, ExxonMobil, Eni and Equinor. CNOOC also came in first in terms of production, bringing 230,000 barrels of oil per day (bpd) online, followed by Petrobras with 211,000 bpd,” Ravi shared.
Regarding business development, the global Mergers & Acquisition (M&A) market reached approximately $150 billion in 2022. According to Erlingsen, “In total, we tracked around 500 deals last year and 66 billion barrels of resources exchanging hands. America was the key M&A market, followed by Europe and Africa. Looking at the net investments in 2022, PKN Orlen led, with a total investment of $18 billion and net traded resources measuring around 1.3 billion barrels. The second largest company in terms of M&A investments was Azule Energy, formed by Eni and bp merging their Angolan assets. The deal was valued at around $14 billion barrels and were primarily offshore deepwater.”
Meanwhile, regarding exploration, while the number of discoveries decreased from previous years, resource volumes actually increased, revealing the significance of the finds.
“There is a clear indication of a cautionary approach by explorers globally. Exploration has gone down from about $100 billion to about $40 billion over the last ten years. However, despite the lack of increases in global exploration spending, the global discovery volumes witnessed an uptake compared to 2021. Liquids continue to dominate compared to gas. However, there was a decrease in the number of announced new finds. This indicates that last year’s crop was more impressive. Offshore dominates, producing about 90% of discovered volumes. Coming to the top discoveries, we see that Guyana leads the chart. However, the key take is the story of Namibia, wherein TotalEnergies and Shell announced the basin opening with Venus and Graff within their respective blocks,” stated Shenga.
Concluding the webinar, Savenkova provided insight in energy transition embracers, identifying the most resilient players to low carbon scenarios as well as the E&P players with the most ambitions in 2021 – the year with the most recent available data.
“Despite the challenges of energy security that the industry experienced last year, companies managed to deliver on decarbonization targets. Upstream emissions have become one of the most important indicators to analyze how a company would excel in a low-carbon future. Equinor continues to be a leader in terms of sustainability. Saudi Aramco and ADNOC have the lowest CO2 emission intensity in the world, due to taking huge strides in operation efficiency improvement. ADNOC was the first company in the industry to source 100% of its onshore operations from nuclear and solar plants. The top companies with decreases in upstream CO2 emissions intensity were Sonatrach and Petronas, reducing by 15-20%,” stated Savenkova, adding that, “Last year, NOCs from all over the world also took steps towards an energy transition, with their response covering decarbonization, prioritizing gas and expanding into petrochemicals. Two companies stand out, including Saudi Aramco and ADNOC. Hydrocarbons will continue to play an important role in the energy mix for many years to come.”