Underspend threatens upstream corporate growth Report

Insight 08 November 2018

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Report summary

Investment by 52 leading IOCs and NOCs in our Corporate Service is at a very low ebb. Four years of deep capital rationing has had a severe impact on resource renewal, particularly in the conventional sector. The result is a corporate sector divided in two: the US tight oil ‘haves’ with a strong outlook for investment and growth; and the ‘have nots’, many of which lack a hopper of substance. We analyse how the lack of investment has impacted growth prospects and look at the options for companies to sustain production next decade.

Executive Summary
Upstream growth in jeopardy?
Investment has collapsed and future spending is trending down
Over half of companies are failing to replace production
Conventional growth hoppers have shrunk
while US tight oil resource grows, and grows, and grows
Production problems loom next decade
What are the options to sustain output to 2030?
- 1. Contingent resource commercialisation: 3 million boe/d risked potential
- 2. Conventional exploration: 6 million boe/d but unevenly distributed
- 3. M&A: growth pressures will trigger more consolidation
Additional investment of over US$1 trillion will be needed
Conclusion
Appendix