The Covid-19 downturn will expedite peak oil demand, putting a lid on exploration efforts in remote offshore areas and as a result, reducing the world’s recoverable oil by around 282 billion barrels, Rystad Energy said in its annual global energy outlook released this week.
Per Rystad, a Norway-based energy intelligence firm, global total expected remaining recoverable oil resources will decrease to 1,903 billion barrels, 42% of which are in OPEC territory, with the remaining 58% located outside the alliance.
“Non-OPEC countries account for the lion’s share of “lost” recoverable resources with more than 260 billion barrels of undiscovered oil now more likely to be left untouched, especially in remote exploratory areas,” says Rystad Energy’s Head of Analysis, Per Magnus Nysveen.
OPEC countries are much more resilient to the current crisis and will only lose a fraction compared to their non-OPEC counterparts such as the US (-49 billion barrels) and Russia (-31 billion barrels), Rystad said.
“OPEC countries are expected to lose 21 billion barrels of reserves potential as the negative developments in Venezuela and Iran outweigh the increased strength and reserves potential of core OPEC countries in the Arab Gulf region,” Nysveen adds.
Rystad Energy releases its annual outlook following the publication of the BP Statistical Review "to provide an independent, solid and clear comparison of how the year has changed the world’s energy landscape."
Below are some regional takeaway Rystad highlighted:
In the US Rystad expects lower upstream activity in shale acreage, less exploration in the Gulf of Mexico, and a reduced number of licensing rounds on the Atlantic West Coast. In total, this decreases recoverable resources by 49 billion barrels.
Canada will likely see more high-cost oil sands reserves left in the ground (14 billion barrels) due to increased environmental, social, and governance (ESG) concerns.
Mexico will likely see reduced exploration for deepwater and shale oil reserves.
In Brazil, more pre-salt reserves will likely be left in the ground.
With no normalization in sight, Venezuela’s actual reserves potential falls further by 21 billion barrels.
Russia will see more of estimated Arctic offshore oil reserves left in the ground due to peak oil demand coming sooner, lowering oil reserves by 31 billion barrels.
Similarly, Norway will also have to leave more reserves in the ground in the Barents Sea, due to little exploratory success and the assumption that
Covid-19 will bring peak oil demand sooner.
In Nigeria, after a decade-long debate on oil policy reforms, potential reserves are expected to fall further by 6 billion barrels.
With no imminent peace in sight in Libya, future production potential falls further by 4 billion barrels.
Despite positive news on oil policy reforms in Algeria, shale exploration potential is expected to fall by 7 billion barrels of oil.
In Angola, Rystad forecast less deepwater exploration as peak oil demand comes sooner due to Covid-19.
As the clear winner of the OPEC+ agreement, Saudi Arabia is expected to add 25 billion barrels to future production potential despite peak oil coming sooner.
China’s proven reserves are actually up, but future prospective resources are weighed down by low shale exploration, so the net result is negative.
In Iran, the risk of prolonged sanctions reduces recoverable reserves potential by 18 billion barrels.
For Australia, Rystad expects reduced exploration in new basins.