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In a statement sent to Rigzone recently, Westwood Global Energy Group reported that “substantial” drilling activity, averaging 53,000 wells per year through to 2030, will help elevate the production of crude, condensate, natural gas, and natural gas liquids (NGLs) to a “high” of 173 million barrels of oil equivalent per day by 2030.
That figure represents a nine percent jump from 2022’s figure of 159 million barrels of oil equivalent per day, according to the statement. It also marks a seven percent increase on the 2020 average of 151 million barrels of oil equivalent per day and a two percent increase on 2023’s expected average of 162 million barrels of oil equivalent per day, Westwood Senior Analyst Ben Wilby outlined in a separate comment to Rigzone.
In its statement, Westwood highlighted that its findings indicate that 428,000 wells are expected to be drilled over the forecast, “with onshore accounting for 95 percent, dominated by China, Russia, and the United States”.
Offshore, more than 17,000 surface wells are forecast, Westwood noted, outlining that activities will be driven by Qatar and Saudi Arabia, “while 2,000 subsea wells are expected between 2023-2030, led by the Americas”.
Liquids production (crude, condensate, and NGLs) is forecast at 100 million barrels per day by 2030, according to Westwood, which highlighted that this is up eight percent on 2022, “driven by increased crude production from deepwater areas, such as Brazil and Guyana, as well as additional supply from the Middle East”.
“Crucially, much of the basis for this supply has been sanctioned,” Westwood said in the statement.
“Between Brazil and Guyana, three million barrels per day of floating production, storage, and offloading (FPSO) capacity have passed final investment decision (FID) but are yet to commence commercial operations, while many of the major expansion projects in Saudi Arabia and the UAE have also been sanctioned, with construction underway,” the company added.
Gas production is expected to increase 10 percent by 2030 from new projects in areas such as Mozambique, the Mediterranean, onshore U.S., and brownfield developments, such as the North Field expansion offshore Qatar, Westwood pointed out.
In the statement, Wilby said, “the level of investment seen in the last few years will lead to a material increase in structural production capacity over the forecast”.
“As a result, continued OPEC+ intervention will likely be required beyond 2024 to ensure a balanced market and for oil prices to remain at or above Saudi Arabia’s fiscal breakeven range,” he added.
“Deeper oil production cuts in 2Q and 3Q, including an additional one million barrel per day cut by Saudi Arabia, a move intended for July, has been extended to the end of 2023. The cuts could see Saudi Arabian crude production fall to nine million barrels per day for much of 2H 2023 with uncertainty over when production will be restored,” he continued.
“Supply additions, especially in the latter years of the forecast, remain at the pre-sanctioning stage, which represents a downward risk to expected output, especially if prices drop below $60 per barrel,” Wilby went on to state.
When Rigzone asked Westwood about the main risks to its forecasts, Wilby said fluctuation in oil and gas demand remains key, “as this has an impact on commodity prices, which in turn impacts investments”.
“An uplift in demand post-pandemic, coupled with OPEC+ supply side market intervention has helped Brent prices recover from a 2020 average of $42 per barrel to an average of $84 per barrel 2021-2023. However, a material change from the expected demand trajectory remains a clear risk,” he added.
“In terms of supply, numerous production-boosting projects, especially in Africa, still need to be sanctioned; hence increasing downside risk to the outlook should oil prices decline below a level that supports appetite for investment,” Wilby continued.
“However, there is a greater level of certainty around production from Latin America, where three million barrels per day of additional FPS capacity in Brazil and Guyana has already been sanctioned but has yet to come onstream. The Middle East has also had a significant level of investment over the last two years, supporting production uplift across much of the region,” Wilby went on to state.
The Westwood analyst told Rigzone that, post 2024, the actions of OPEC+, particularly Russia and Saudi Arabia, remain crucial.
“Westwood expects the group to continue to be reactive to market conditions, intervening to support pricing in excess of Saudi Arabia’s fiscal breakeven,” Wilby said.
“However, should there be a change from this policy, it would undoubtedly have ramifications on the overall liquids supply-demand balance, which will have a knock-on impact on forecast drilling and production activity,” Wilby added.
To contact the author, email andreas.exarheas@rigzone.com
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