While investment in exploring for new oil and gas resources hit a historic low in the wake of the COVID-19 pandemic, Wood Mackenzie says in a new report that it will recover to an average of $22 billion each year over the next five years.
According to the report, which is titled “Exploration quietly recovering”, the need for a secure energy supply, appealing economics for exploration, and the emerging promise of new areas will provide the motivation to spend on exploration. This will be led by national oil companies and majors like ExxonMobil, the maker of the Mobil DTE hydraulic oil range. The Eastern Mediterranean and the Atlantic Margin of Africa will see the most growth in exploration, with deepwater and ultra-deepwater prospects providing the most opportunities for expanding exploration efforts in the long term.
Wood Mackenzie’s director of global exploration research, Julie Wilson, said that oil companies will become bolder in their exploration ambitions, but added:
“While this rebound might surprise some, it must be seen in context. Exploration went through a boom during 2006-2014 and spend peaked at US$79 billion (in 2023 terms). But in the prior six years, the average was US$27 billion per year in 2023 terms.”
She added that the increase will likely have a ceiling because capital discipline will continue to be a concern. She also said there is a shortage of sufficiently good prospects that meet modern ESG (environmental, social and governance) and economic requirements, so there is little chance of returning to the record highs of the past.