Wood Mackenzie isn’t pulling any punches. “The warning signs are there – the industry isn’t finding enough oil.”
And its latest report continues in the same ‘spade is a spade’ vein: “A supply gap opens up in the mid-2020s, reaching 3 million b/d by 2030, 9 million b/d by 2035 and a formidable 15 million b/d by 2040. Barring technology breakthrough, we’ll need new oil discoveries.”
And then the crucial phrase:
“The problem is that the recent rate of commercial volumes found gives little confidence that there will be enough new discoveries to fill the gap.”
It warns that the only solution at this stage is a significant hike of at least 20% in annual investment. It unapologetically lays the finger of blame on the gradual reduction in investment during the current cycle.
Without a commitment to drive new discoveries, there will be consequences. Prices would of course rocket. Companies’ growth targets would be under the spotlight and would inevitably lead to increased numbers of mergers and acquisitions.
However it may even be too late to avoid difficulties altogether. Given that the average length of time between discovery and peak production is the best part of a decade, we’re already running short.
But it urges action nonetheless. (by Precise Consultants)