Affected by the decline in oil prices and weak cash flow, overall global upstream investment will decrease by about 4% next year.
From the perspective of the industry, investment in deepwater drilling has risen against the trend and declined in other areas in varying degrees. Deepwater drilling investment is expected to increase by more than 5% to 6.3%, and the compound growth rate from 2018 to 2022 will reach 7.7%. Shale oil / tight oil is expected to decrease the most, with an estimated 12% decrease, and oil sands, offshore continental shelf, and land are expected to decrease by 5.7%, 4%, and 3.8%, respectively.
From a regional perspective, Africa is the region with the fastest investment growth. Driven by investment growth in countries such as Mozambique and Mauritania, the growth rate of investment in Africa rose to 11%. With the implementation of the Marlim and Mero projects, Brazil is expected to grow by 6% next year, driving South Africa. Upstream investment in the Americas has increased; with new LNG projects and redevelopment of old oil fields, investment in the Middle East and Australia will also increase. In the past 10 years, Africa, Mozambique, Mauritania and other countries have discovered 200 trillion cubic feet of proven reserves, which is enough to meet 2/3 of global demand in 20 years. According to Acapu Energy's forecast, if investment is in place, Africa's natural gas production will increase by 150% by 2025, reaching 28 million tons per year.
According to Resta Energy, projects worth US $ 225 billion will be approved next year, mainly driven by natural gas projects, and offshore projects may exceed US $ 100 billion. Although deepwater investment has grown against the trend, its profitability is still questioned. The discovery of oil fields below US $ 60 per barrel in the world will be enough to offset the reduction in production of mature oil fields by 2027. This means that energy projects that are profitable above $ 60 / barrel may face commercial risks in the future. From 2020 to 2023, the break-even point of about 25 billion US dollars of offshore projects is above 60 US dollars / barrel.
According to DNV · GL's "Energy Transformation Outlook 2019-Oil and Gas Industry", in the long run, offshore production is still very important, but by 2050 it will be reduced from 37% of the current crude oil production to 30%. Although the cost of deepwater oil production has been greatly reduced, it still faces huge commercial and social risks. It still has a long way to go to compete with onshore low-cost oil fields and shale oil.