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Europe’s upstream in transition – is growth an option?

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05 December 2019

Europe’s upstream in transition – is growth an option?

Report summary

The European upstream sector is undergoing multiple transitions. The energy mix, corporate landscape and public perception to oil and gas are changing, impacting investment decisions and portfolio planning. At first glance, the outlook looks bleak. Indigenous gas production is in decline and the region is ever more reliant on imports. Public and governmental opinion is increasingly negative towards the industry. The Majors are divesting legacy non-core positions in Europe and bureaucratic issues have delayed key FIDs and start-ups. Yet, there are positives to highlight too. Some of Europe’s fundamental attractions will persist – easy infrastructure access, liberalised markets and competitive fiscal terms. Liquids production will increase in the near term, frontier exploration is abundant, and licensing activity is booming. From this, we recommend three key principles for new small- or mid-cap entrants into Continental Europe.

Table of contents

  • Executive summary
    • Exploration – a tale of contrasts
    • The negatives: governments are responding to public opposition with new restrictions
    • The positives: the Majors have committed to high-impact exploration and licensing rounds abound
    • Production – mixed messages as Europe’s gas imports increase
    • Gas outlook: obstacles ahead for the ‘energy transition fuel’
    • Oil and condensate outlook: growth projects must adapt to align with environmental concerns
    • Strengths
    • Weaknesses
    • 1. Don’t be afraid of mature basins, with potential to scale up by playing across borders
    • 2. Prioritise regulatory and fiscal stability above all else
    • 3. Pick M&A options wisely, learning lessons from the North Sea
    • Majors to rationalise further. Where in Europe will the axe fall next?
    • More asset sales by NOCs and ‘national champions’ in Central and Eastern Europe?
    • Who are the likely buyers?
    • Europe’s upstream in transition – is growth an option?

Tables and charts

This report includes 7 images and tables including:

  • European countries with drilling restrictions
  • European countries with licensing rounds in 2018-20
  • European sales gas production
  • European oil and condensate production
  • Global fiscal benchmarking – Europe’s competitive advantage
  • Global Environmental Regulatory Framework Index
  • Majors’ remaining value in Europe (as percentage of global portfolio)

What's included

This report contains:

  • Document

    Europe’s upstream in transition – is growth an option?

    PDF 2.65 MB