LONDON (Reuters) – Top oil and gas companies significantly slowed their search for new fossil fuels last year, data shows, as lower energy prices driven austerity as a result of the coronavirus crisis.
The acquisitions of new onshore and offshore exploration permits for the top five western energy giants have fallen to their lowest in at least five years, data from Oslo-based consulting firm Rystad Energy shows.
License rounds for exploration fell last year as a result of the epidemic, while companies like Exxon Mobil, Royal Dutch Shell and France’s Total also cut their spending, said Rystad Energy analyst Palzor Shenga.
“Acquiring additional rental contracts entails costs and requires a number of work obligations to be met. Therefore, companies would not want to build additional acreage in their non-core businesses, ”said Shenga.
(GRAPH: Slow exploration – here)
Of the five companies, BP saw by far the largest decrease in the acquisition of new acreage in 2020. Bernard Looney, who became BP’s CEO in February, outlined a strategy to reduce oil production by 40% or 1 million barrels per day by 2030. its exploration team has been rapidly scaled back in recent months.
Exxon, the largest US energy company, acquired the group’s largest acreage in 2020, according to Rystad Energy, at 63% in three blocks in Angola.
Total came in second with two large blocks acquired in Angola and Oman.
By acquiring exploration area, companies can look for oil and gas. When new resources are discovered in sufficient quantities, the companies have to decide whether to develop them, a costly process that can take years.
As a result, the decline in exploration activity could lead to a supply shortage in the second half of the decade, analysts said.
(Image: oil company spending – here)
Reporting by Ron Bousso; Editing by Alexander Smith