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Global oil exploration to attract $1.7 trillion, despite energy transition- Report

Despite efforts by oil majors to hasten energy transition, a new report by international energy research firm, Rystad Energy has forecasted a total of $1.7 trillion will be spent on well services in the 2021 to 2030 period, thanks to increasing global demand for drilling and well services.

Nigeria and other oil-producing countries are setting ambitious targets to minimize CO2 emissions and speed up the shift towards green energy, however, a new report by Rystad Energy says that does not mean that oil and gas production will cease or lose its significance in the energy industry.

“We expect more than 600,000 wells to be drilled globally between 2021 and 2030. Global drilling activity is poised to bounce back from a tough 2020 with close to 58,000 wells lined up for the current year,” Rystad Energy said.

The independent research firm in Norway believes service companies’ revenues are also slowly catching up, with close to $102 billion in revenue expected in 2021.

“Although these numbers are still 30percent lower than in 2019, the top five service companies are battling their way out of last year’s downturn and are on track to record an average 2percnet revenue growth this year, a trend that is expected to continue through to 2025,” the report explained.

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The oilfield service giants Schlumberger, Halliburton and Baker Hughes reported combined revenue growth of 7percent in the second quarter from the first this year.

The report noted that the 15percent uptick comes as a relief to global oil service markets after the slowdown brought on by the pandemic and the oil-price slump.

Rystad Energy predicts the conventional well market to remain a key driver in the drilling market, with China leading the way with around 170,000 wells to be drilled in the 2021-2030 period.

PetroChina is also expected to spend $120 billion through 2030, followed by Saudi Aramco and Russia’s Rosneft each spending around $70 billion.

Saudi Aramco will split its $70 billion into offshore shelf, shale and conventional onshore, with the latter segment receiving the largest share while Rosneft will focus almost entirely on Russia’s conventional onshore segment with nearly 98percent of the company’s total investments.

“Spending on upstream well services is expected to continue to make up a major share of exploration and production players’ expenditures – but at the same time, companies like ExxonMobil, Shell and Chevron are ramping up their efforts to tackle the energy transition,” the report said.

ExxonMobil has invested $10 billion over the past two decades on low-carbon solutions such as carbon capture and storage and plans to invest $3 billion more through 2025.

Chevron has allocated $300 million for investments to advance the energy transition in 2021, although this represents just 2percent of its total budget and significantly trails the company’s European peers.

Chevron is also exploring alternative power sources, such as fusion technology and advanced geothermal, which are emerging technologies with reduced intermittencies compared to other renewable sources.

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