Oil and gas exploration is off to a flying start in 2019, with majors taking a bigger bite of the conventional resources discovered in the first quarter, according to Rystad Energy
Unfortunately Nigeria is off the radar of those resource-endowed countries that are making waves in this area. The country has in the last 12 years not engaged in any serious exploratory activities in oil and gas.
There is no prospect that such an exercise would happen in the nearest future with the Petroleum Industry Bill that would have helped to unlock the resources being bogged down at the National Assembly.
Global discoveries of conventional resources in the first quarter reached a robust 3.2 billion barrels of oil equivalent (boe). Most of the gains were recorded in February, posting 2.2 billion barrels of discovered resources – the best monthly tally on record since August 2015.
“If the rest of 2019 continues at a similar pace, this year will be on track to exceed last year’s discovered resources by 30%,” says Taiyab Zain Shariff, Upstream Analyst at Rystad Energy.
ExxonMobil was the most successful, with three significant offshore discoveries accounting for a whopping 38% of total discovered volumes. European majors Total and Eni are also in the fold with successful offshore wells in South Africa, the United Kingdom, Angola and Egypt.
From a global perspective, the push for substantial new discoveries shows no signs of slowing down, with another 35 high impact exploration wells expected to be drilled this year, both onshore and offshore. Three such highly prospective wells are already underway: the Shell-operated Peroba well, off Brazil, with pre-drill prospective resource estimates of 5.3 billion boe; Eni’s Kekra well in Pakistani waters, with pre-drill prospective resource estimates of 1.5 billion boe; and the Total-operated Etzil well off Mexico, with pre-drill prospective resource estimates of 2.7 billion boe.
“If these wells prove successful, 2019’s interim discovered resources will be the largest since the downturn in 2014,” Shariff remarked.
Meanwhile, OPEC+ group compliance has remained intact despite a decline in US market share
OPEC exports to the US are likely to continue trending downwards, according to the majority (88 per cent) of energy executives surveyed by the Gulf Intelligence
Despite the loss of US market share, OPEC and its coalition of non-OPEC producers have continued their strong commitment to comply with the output reduction deal
OPEC crude exports to the US dropped to a five-year low in January, while US stockpiles climbed to 3.6 mmbbl in February, according to the US Energy Information Administration (EIA).
Since 2008, US production has increased by a staggering 140 per cent. Some analysts predict that by 2020, the country could be a net exporter of crude and refined products.
In February, US output hit 12mn bpd, contrary to previous expectations that this level would not be reached until the second half of the year.
Saudi Arabia, OPEC’s largest oil producer, has seen its crude exports to the US drop steadily in recent years, from 1,361mn bpd in 2012 to 949,000 bpd by 2017 and around 500,000 bpd by the end of last year. In fact, the US imported less crude oil altogether, not just less OPEC crude, from 262.8mn bpd per month at the beginning of 2017 to 226.6mn in October 2018, the last month for which data are available, according to the EIA.
Despite the loss of US market share, however, OPEC and its coalition of non-OPEC producers, including Russia, have continued their strong commitment to comply with the output reduction deal agreed in December, namely to collectively cut production by 1.2mn bpd by at least June 2019.
According to OPEC Survey, the agreement by the group of 25 producers, known as OPEC+, follows two years of 1.8mn bpd cuts, which succeeded in reversing a three-year oil price slide and restored a certain amount of stability to the market.
The strategy has continued to work with Brent prices comfortably holding in the US$60s bbl range since the beginning of this year. Brent closed at US$68.39 per bbl on March 29, 2019.
Olusola Bello
