The effects of the COVID-19 virus, in tandem with the ongoing crude oil price war, are likely to reduce oil and gas project sanctioning by up to $131 billion, or about 68% year-on-year, as major players batten down the hatches to weather the story, according to Rystad Energy.
At the same time, at least nine of the world’s top planned exploration wells for 2020 are at risk of suspension, the independent energy research and business intelligence company has said.
Most at risk
Rystad said the wells most at risk were located in Norway, Brazil, the Bahamas, Guyana, the US, Gambia and Namibia that would target a combined 7 billion barrels of oil equivalents (boe).
These wells are at risk due to commercial viability at current price levels, shutdowns that affect the supplies of equipment components, operators’ prioritisation among other targets, and limitations in crew movements.
“Given the prevailing global situation, we now foresee that the cumulative discovered volumes by the end of the year could go even below the 2016 level of 8.9 billion boe, which was the decade’s lowest. This will solely depend upon how many key wildcat wells will still see a spinning drillbit in the coming months, as some of them could be either suspended or postponed”, said Rystad Energy senior upstream analyst Palzor Shenga.
In the first quarter of 2020 explorers only discovered new volumes of around 2.5 billion boe, with 22 discoveries evenly split onshore and offshore and gas representing just over half of the volumes. Volumes are down about 40% from the corresponding period of 2019 and the number of discoveries have almost halved.
At the start of 2020 Rystad Energy had anticipated that global discovery trends would continue to increase, but now says the market situation will challenge exploration.
