Global oil and gas exploration and development has entered the stage of "small jogging"

Recently, OPEC raised world oil demand in 2023 to 103 million b/d in the "2022 World Oil Outlook" report, an increase of 2.
7 million b/d
over 2022.
The rise in demand has driven global oil and gas exploration and development back into the acceleration stage
.
OPEC believes the world needs to invest more in new oil production to meet demand and address concerns
about energy security.
However, in the context of energy transition, the clean and decarbonized energy industry has become a consensus, and it is expected that in the current and future period, the pace of increasing production in the world oil and gas industry will not be too fast, but "small steps and jogging".
.
.

Oil and gas exploration blooms at multiple points, and upstream investment slowly recovers

The growth of shale oil and gas investment in the United States will promote the steady increase in oil and gas reserves and production in the United States, which is one of the highlights of
global oil and gas exploration and development.
Against the backdrop of geopolitical tensions, Europe is showing signs of energy supply strain, gradually increasing its efforts
to purchase natural gas from around the world.
High gas prices and high oil prices have driven the recovery of the shale oil and gas industry in the United States, which has become an important support
for the recent growth of oil and gas storage and production in North America.

Shale oil and gas projects are mostly "small, fast and flexible" projects, and the response to oil prices is relatively rapid
.
In addition, after years of accumulation, shale oil and gas in the United States has become a climate and has the conditions
to affect the world oil and gas industry.
EIA's drilling report data shows that since 2022, oil and gas investment and production in the seven major shale oil and gas regions in the United States have maintained a steady
upward trend.

While North American oil and gas recovery, South American oil and gas exploration and development will also be further active driven by high oil prices, which is the second
focus of global oil and gas exploration and development.
South America is one of the world's important oil and gas producing areas, with an annual total output of more than 300 million tons of oil equivalent, 13.
4 billion tons of remaining proven crude oil recoverable reserves, and 7 trillion cubic meters of remaining proven natural gas recoverable reserves, with a reserve-recovery ratio far higher than the world average
.
Among them, the offshore oil and gas resources of Brazil, Guyana and other countries have great potential for development, and are the focus areas
of international oil companies.
At present, multinational oil companies such as ExxonMobil have a certain project distribution in South American oil and gas resource countries, and new oil and gas discoveries
have been made in the past two years.
Due to its proximity to North America and abundant resources, South America was once considered to be another growth pole of world oil and gas production after the Middle East and North America, and was the radiation area
of the North American oil and gas revolution.
Under the current new situation, with the change of the global oil and gas pattern, South America may become an important stage
for the global oil and gas industry.

Driven by the shortage of energy and increasing demand in Europe, the Middle East and Africa will further increase their oil and gas exploration and development
.
Most of OPEC's members are Middle Eastern and African countries, which have the geographical advantage
of being close to Europe.
After the conflict between Russia and Ukraine, Europe's dependence on oil and gas in the Middle East and Africa has increased
significantly.
Many European countries obtain oil and gas resources from the Middle East and Africa in various forms, with a focus on natural gas, which will also drive a significant increase
in oil and gas investment in these two regions.

In fact, since last winter's energy supply crunch, European energy policy has shown a positive and pragmatic side, and its demand for fossil fuels, especially natural gas
, is expected to continue.
In this context, European oil and gas suppliers, whether local or external, must take oil and gas exploration and development seriously
.
The development focus of European and American oil and gas companies will also shift from Central Asia-Russia to oil-rich areas
such as the Middle East and Africa.
Therefore, oil and gas exploration and development in the Middle East and Africa will attract more attention from international energy companies, which will also become the third
focus of global oil and gas exploration and development in the current and future period.

In addition, China's oil and gas exploration and development will also maintain a stable progress
.
China has always been an important participant in
global oil and gas exploration and development.
At present, China is in the critical period
of the "seven-year action plan" for increasing oil and gas reserves and production.
From the perspective of technical implementation, the expected effect has been achieved, and oil and gas production has grown steadily, especially oil production has stopped falling and rebounded
.
Under the situation of increasing the intensity of oil and gas exploration and development, in recent years, a series of major oil and gas discoveries
have been obtained in China.

From the perspective of demand, China's oil and gas demand, especially natural gas demand
, is expected to have a long period of stability.
The report of the 20th National Congress of the Communist Party of China proposed that based on China's energy resource endowment, we should increase the exploration and development of oil and gas resources, increase reserves and production, and ensure energy security
.
According to the direction guided by the report of the 20th National Congress, China's oil companies will continue to play active roles in the field of oil and gas exploration and development, and contribute to the realization of oil and gas reserves and production
.
On this basis, China's oil and gas exploration and development will continue to maintain a positive development trend, which has also become the fourth
focus of global oil and gas exploration and development.

Unstoppable energy transition Oil and gas investment growth is limited

In the coming period, global oil and gas demand still has some room for growth, and oil and gas investment will also increase
accordingly.
According to the forecast of Ruijide Energy, global oil and gas investment will reach 628 billion yuan in 2022, a year-on-year increase of 4%, of which upstream oil investment is expected to increase by 7% year-on-year, and natural gas and LNG investment is expected to increase by 14%
year-on-year.

However, since the overall trend of energy transition has not changed, the share of oil and gas in energy demand will gradually be replaced by new energy, so the growth of oil and gas investment is limited, and the global oil and gas exploration and development will generally show the characteristics of
"small jogging".

Although some countries' energy transition policies have been relaxed under the tight energy supply situation, the current global non-fossil energy is still in a period
of rapid development.
In fact, long before the outbreak of the epidemic, Europe has been aggressively promoting the development of new energy sources
.
Due to the underestimation of the negative impact of extreme weather and other factors on energy stability, Europe's coal and oil removal and gas removal capacity are too large, which once led to energy tension and spread around the world
.
Out of the consideration of "making up for the dead", major European economies have introduced energy policies
to return to coal and nuclear weapons.

However, from the perspective of the EU's recently released energy strategy, "energy conservation, opening up diversified energy supply channels and continuing to unswervingly develop new energy" is its strategic choice
.
Among them, accelerating the construction of energy storage and intelligent power systems has received unprecedented attention, and the original intention of developing new energy in Europe has not changed
due to energy shortages.

The same is true of the trends in the energy transition in the United States and elsewhere around the world
.
In August, the United States introduced the largest climate bill in history to support the development of
new energy sources.
The introduction of the bill further demonstrates the determination of the US government to develop new energy
.

As a major global energy consumer, China has a high degree of dependence on oil and gas and is the main contributor to the growth of
world oil and gas demand.
The reality is that China's oil demand is now moving towards its peak step by step
.
Last year, China's dependence on foreign oil has declined
.
Although the growth of natural gas demand is expected to continue for a long time, China's continuous growth of natural gas production and the growth of new energy installed capacity will effectively alleviate the growth pressure
of natural gas demand.

China's determination to develop new energy is unswerving
.
The report of the 20th National Congress of the Communist Party of China proposed to "accelerate the planning and construction of a new energy system", the main body of which is new energy
.
With the gradual completion and use of the domestic "Shage Waste" new energy base, with the construction and operation of UHV power grid, it is expected that by 2030, China will be expected to achieve the goal
of non-fossil energy accounting for 25% of primary energy consumption.

Oil and gas development focuses on key points "strong combination" has become the new normal

Although there are multiple points of interest in global oil and gas exploration and development in the short and medium term, multi-point flowering of exploration and development does not mean blooming everywhere, and the recovery of growth in exploration and development will focus on key areas
.

In the context of the promotion of energy transformation, both multinational oil companies and national oil companies are planning the layout
of new energy business to varying degrees.
International oil companies have always been major contributors to global oil and gas discovery, and SLB (Schlumberger), Weatherford, etc.
, as top oil and gas technology service providers, are the main technical contributors
to oil and gas discovery.
However, in recent years, the strategic focus of the above-mentioned companies has shifted
to new energy sources to varying degrees.
This can be seen from events such as the change of name and CEO of oil companies, and major business changes
.

In the face of business restructuring, the share of low-carbon investment will gradually increase
.
Under the limited total investment, the amount of oil and gas investment will be limited
.
Under this situation, the upstream investment of oil companies in oil-rich regions such as the Middle East, Africa and South America will focus on a few areas
with abundant oil and gas reserves, large development potential and low development costs.
Among them, deepwater and ultra-deepwater oil and gas resources will be more favored
.
In addition, in order to reduce risks and share benefits, there is a growing
awareness of oil companies seeking capital cooperation among themselves.
Strong alliance and cooperative development will also become the
new normal of oil and gas exploration and development.
For example, Total Energy and Eni collaborated to make a major gas discovery off the coast of Cyprus; Eni and BP merged their oil and gas businesses in Angola, and the joint venture Azule Energy became Angola's largest oil and gas producer
.

Upstream looks

Point 1 The growth of shale oil and gas investment in the United States will promote the steady increase in oil and gas storage and production

High gas prices and high oil prices have driven the recovery of the shale oil and gas industry in the United States, which has become an important support
for the recent growth of oil and gas reserves and production in North America.
EIA's drilling report data shows that since 2022, oil and gas investment and production in the seven major shale oil and gas regions in the United States have maintained a steady
upward trend.

Highlight 2 South American oil and gas exploration and development will be further active driven by high oil prices

South America is one of the world's important oil and gas producing areas, with an annual total output of more than 300 million tons of oil equivalent, 13.
4 billion tons of remaining proven crude oil recoverable reserves, and 7 trillion cubic meters of remaining proven natural gas recoverable reserves, with a reserve-recovery ratio far higher than the world average
.

Point 3 Oil and gas exploration and development in the Middle East and Africa will attract more attention from international energy companies

Driven by the shortage of energy and increasing demand in Europe, the Middle East and Africa will further increase their oil and gas exploration and development
.
Most of OPEC's members are Middle Eastern and African countries, which have the geographical advantage
of being close to Europe.
In the context of geopolitical tensions, many European countries have obtained oil and gas resources from the Middle East and Africa in various forms, which will also drive a significant increase in oil and gas investment in these two regions
.

Point 4 China's oil and gas exploration and development will maintain a positive development trend

China has always been an important player
in global oil and gas exploration and development.
The report of the 20th National Congress of the Communist Party of China proposed that based on China's energy resource endowment, we should increase the exploration and development of oil and gas resources, increase reserves and production, and ensure energy security
.
According to the direction guided by the report of the 20th National Congress, China's oil companies will continue to actively act in the field of oil and gas exploration and development, and contribute to the increase of oil and gas reserves and production
.

Related links

EIA raised its 2022 oil production forecast

The U.
S
.
Energy Information Administration (EIA) released its monthly report on November 8 and projected U.
S.
oil production in 2022 to be 11.
83 million b/d, up from the previous forecast of 11.
79 million b/d, the first time EIA has raised the estimate since June.

In addition, the Permian Basin, the largest shale oil basin in the United States, will increase crude oil production by about 50,000 b/d in November to a record 5.
453 million b/d
in November, EIA said in its Oct.
17 drilling productivity report.

The EIA expects U.
S.
crude oil production to increase by about 104,000 b/d in November to 9.
105 million b/d, the highest level
since March 2020.

In the Bakken region of North Dakota and Montana, EIA forecasts that crude oil production will increase by 22,000 b/d in November to 1.
19 million b/d, the highest level
since December 2020.

In Eagle Ford, southern Texas, production will increase by 18,000 b/d in November to 1.
226 million b/d, the highest level
since April 2020.

The EIA forecasts that total natural gas production from large shale basins will increase by 600 million cubic feet per day in November to a record 95.
1 billion cubic feet per day
.

In Appalachia, the largest shale gas basin in Pennsylvania, Ohio and West Virginia, production will increase to 35.
7 billion cubic feet per day in November, the highest level
since the record of 36 billion cubic feet per day was set in December 2021.

South American drilling activity will peak this year

Drilling and completions in South America are expected to peak
this year, according to RichEnergy.
The rebound in offshore wells was more pronounced, driven by rising offshore drilling activity in Brazil and Guyana
.
In the coming years, offshore drilling activity in South America will remain around 6% of global drilling activity, while onshore drilling activity will remain around
3%.
Offshore production in South America is expected to surpass onshore production
by 2024.

Another region of unprecedented activity in South America is Argentina's Vaca Muerta shale region
.
In recent years, international oil companies, including ExxonMobil, Chevron, Total Energy and Shell, have entered the region to explore and develop shale oil and gas
.
Richtech expects the region to exceed 300,000 barrels per day early next year and expand further to 400,000 barrels in 2024, with total production rising to a nearly 20-year high
.

Africa's natural gas production is expected to double by 2030

Natural gas production across the continent is expected to grow to 335 billion cubic meters by 2030, up from 260 billion cubic meters
in 2022.
If oil and gas producers expand their input, they could reach this production target
by 2025.

From the perspective of investment priorities of oil and gas companies, deep-sea natural gas development potential is greater, and its proportion of Africa's total natural gas production is expected to increase from the current 9% to 38%, and will continue to maintain the growth momentum
.
The good prospects for increasing production are expected to stimulate the rapid growth
of related investment.
In 2021, $12 billion will be invested in Africa's natural gas sector, of which US$8 billion will be invested in deep-sea natural gas projects
.
Investment is expected to reach $40 billion in 2030, of which $24 billion
is invested in deep-sea natural gas.

In the context of rising global oil and gas demand and tight supply, Africa's strategic position in the global energy landscape will be further enhanced
.

□ Luozo County, Sinopec Economic and Technological Research Institute