Global activity looks solid and is increasing

The short-to-near-term outlook for global upstream activity should see the pace remain flat for the balance of the year, with signs that projects will pick up after the turn of the year. This does not mean that there hasn’t been growth in the last couple of years. Indeed, we estimate that drilling outside the U.S. grew 4.1% during 2023 and will increase another 1.4% through 2024.  

A number of factors are playing into the equation, including a persistent oversupply of oil on the market that appears to be keeping drilling efforts from being more robust. Accordingly, oil prices for both Brent and WTI are a good $10+/bbl lower than at this same time last year. There also is the situation with countries and companies continuing to diversify sources of oil and gas supply away from Russia since the February 2022 invasion of Ukraine. And the Israeli-Hamas/Hezbolah conflict is creating instability in the Middle East, although it has not had a noticeable effect on upstream activity in the region, so far. 

By the same token, operators and investors are gaining optimism from excellent exploration and development results in places like Guyana, Suriname, Namibia, Brazil and West Africa. And let us not forget the stout development work proceeding in Saudia Arabia and the UAE, principally Abu Dhabi.  

The U.S. has been a drag on the upstream market all through 2024, continuing a trend that began in mid-2023. There are some reasons for this. Various operators continue to practice fiscal discipline and increase dividends to shareholders. Also, the prices for oilfield equipment and services have not come down as much as some operators were hoping. In addition, many industry companies are having trouble hiring enough people to allow them to expand activity. Last, but certainly not least, many U.S. operators are waiting to see which side wins the Presidential election on Nov. 5. We should know after the election which direction federal policy will take on energy and oil and gas, in particular. 

Global highlights. Drilling outside the U.S. during 2023 was 4.1% higher than during 2022. Wells drilled outside the U.S. totaled 41,844, compared to 40,195 in 2022. This year, World Oil projects the number of wells drilled outside the U.S. will increase 1.4%, to 42,426 wells. However, six of eight regions will have minor-to-moderate declines. This is being offset by gains in the Middle East and Far East. And the Former Soviet Union is down only 2%, strictly because Russia is coming down from a record year in 2023.   

As for global production, output of crude and condensate experienced minor growth during 2023. Production was up 0.6%, averaging 82.515 MMbopd. Not surprisingly, output was up in just four of the eight regions that World Oil tracks.  

NORTH AMERICA  

In activity outside the U.S., both Canada and Mexico featured new discoveries.  Yet output was impacted by continued wildfires in Canada, and Mexico continues to aim for a recovery in production.  Regional drilling, including the U.S., is predicted to decrease 3.5%, to nearly 24,000 wells. Regional oil production was up an impressive 5.9%, due to industry efficiency gains. For more details on the U.S., please turn to the main U.S. forecast article. 

Canada. Optimism is slowly returning to the Canadian oil and gas sector, as global economic forces finally appear to be outpacing the misguided climate policies of the nation’s federal government. One of the key growth areas for industry this year is in the development of LNG facilities in British Columbia, which should alleviate some of the downward pressure on Western Canadian natural gas prices. Alberta has posted several production records this year, with crude oil output reaching a new high of 3.9 MMbpd in August. For more details on Canada, please turn to the main Canadian forecast article. 

Mexico. Following on the heels of discoveries in Blocks 7 and 10, Eni added a third discovery in the Sureste basin, bringing total estimates of resources in place to 1.3 Bboe.  Efforts to target the Zama field’s 800 MMboe are also underway, with a secured FEED contract, while DeepOcean has secured a subsea contract extension and STRYDE and Woodside have signed two contracts for offshore work. 

Meanwhile, Pemex aims to revive activity in the Gulf of Mexico’s aging assets by partnering with private service providers, since production has dropped to 1.8 MMbpd oi oil and condensate from nearly double that rate two decades ago. World Oil anticipates drilling activity to dip 3.1% for 2024.    

Cuba. The Cuban government on Sept. 11, 2024, approved the Block 9 Amistad field development project that Australian firm Melbana Energy will operate. As part of the project, remediation of the Alameda-2 completion is planned for November, the objective of which is to restore the well’s initial production rate of 1,235 bopd. Approval of the field development followed the successful flow testing of the Alameda-3 appraisal, Fig 1. Drilling of the well had begun in mid-December. 

SOUTH AMERICA 

With disappointment reigning after earlier hopes of suspended sanctions were dashed, Venezuela has was passed up by Guyana in terms of oil exports earlier this year. Meanwhile, there is no end to Guyana’ growth in sight.  Production increases have been a focus for Argentina, Brazil and Colombia, though the latter still has administrative roadblocks to contend with. World Oil expects drilling activity to dip 11.7% in the region, while oil production was up a robust 8.6%.  

Brazil. Given strong production of 3.73 MMbpd at the start of 2024, the country aims to remain in a 3.4–3.9-MMbpd range.  The Búzios and Tupi oil and gas fields reached production milestones during the second quarter, at a cumulative 1 Bbbl and 2.6 Bboe. Petrobras plans to add 14 FPSOs (Fig. 2) by 2028—six of which are headed to Búzios field—as well as invest $7.3 billion overall into the industry.  Meanwhile, over $13 billion in contracts have been issued between Equinor and Petrobras.  World Oil expects drilling to dip 1.4%. Oil production was up a strong 12.6% during 2023.   

Guyana and Suriname. Guyana remains a hotbed of offshore activity, adding Bluefin field—its first 2024 discovery—to the Stabroek Block.  Meanwhile, Exxon’s Whiptail and Hammerhead projects are set to add 30 new wells and raise total production to 1.4 MMbpd after 2029, with over $2.5 billion in contracts secured this year for Whiptail’s development. 

Suriname also boasted a discovery in the Fusaea Block this year, with an estimated 400 MMbbl between it and the nearby Roystonea Block.  Earlier this year, Staatsolie, ExxonMobil and Petronas signed a letter of acknowledgement for developing the 2020 Sloanea discovery on Block 52. Accordingly, World Oil predicts drilling activity to increase 57.1%, as the number of wells goes from single to double digits. Oil production was up 39% during 2023.  

Colombia. The country aims to boost oil production to 800,000 bpd from existing contracts. During 2023, Colombian oil output averaged 777,00 bpd, up 3% from 2022’s level. Meanwhile, two discoveries struck during spring 2024 by Canadian firm Canacol Energy at the Pomeo 1 and Chontaduro 1 wells could add a potential 20 MMcfd to Colombia’s gas production.  

Although the country has committed to an environmental-focused agenda, it is not affecting activity on existing blocks offshore. Indeed, several deepwater wells have been planned this year. During the spring, Equinor and partners YPF and Shell drilled the Argerich 1 deepwater wildcat in the North Argentine basin from the Valaris DS-17 drillship in a 5,010-ft water depth, 196 mi from the port of Mar del Plata. Unfortunately, despite high expectations for the well, Equinor announced on June 27 that Argerich 1 failed to find any clear signs of hydrocarbons, although it apparently confirmed the geological model.  

Meanwhile, Petrobras in early August confirmed a deepwater gas discovery with its Uchuva 2 well on the Tayrona Block. It confirmed the size of the find made with the Uchuva 1 wildcat in 2022. Drilling of Uchuva 2 began during June 2024 in a 2,638-ft water depth, 19 mi off the coast. Last, but not least, Occidental and Ecopetrol are gearing up to drill an ultra-deepwater well offshore Colombia by November. The Komodo 1 wildcat is slated to be drilled in a 3,900-m (12,795-ft) water depth, which would break the world record for deepest water drilled in, currently held by the Ondjaba 1 well, offshore Angola. Ondjaba 1 was drilled in roughly 3,600 m (11,811 ft) of water. 

Argentina. In contrast to earlier administrations, Argentine President Javier Milei has advocated for greater industry production. A focus on the Vaca Muerta shale onshore is shifting interest from older assets, as the country looks to boost production as high as 1.0 MMbpd by 2030.  Meanwhile, drilling began during early June in the TotalEnergies-operated Fénix offshore natural gas field, where peak production is expected to be 10 MMcmd (383 MMcfd). On Sept. 20, TotalEnergies announced that production had begun from Fénix, which is 37 mi off the Tierra del Fuego coast. 

Argentina’s oil production averaged 644,096 bpd during 2023, up 6.0% from the 2022 figure. Overall, World Oil anticipates drilling to decrease 12.5%.     

Venezuela. Despite earlier hopes they would be suspended in quarter-two this year, U.S. sanctions continued. Even so, plans in the underdeveloped Orinoco belt continue for Chevron, with up to 30 wells slated through 2025 and 250,000 bpd of added production by sometime during that year.  Outside the Orinoco belt, the new Tomoporo and Le Ceiba fields are reputed to boast a collective 5 Bbbl of oil.  World Oil anticipates drilling activity to increase 13.3%. Oil production was off a minor 0.2%, at 830,742 bpd. 

WESTERN EUROPE          

The region continues to operate with a sense of urgency in an effort to counter the ripple effects of the Ukraine-Russia war. Even so, the U.K. is set to continue a historical record of regulatory interference, lending uncertainty to the future operating landscape.  Norway, on the other hand, is maintaining a heightened pace of exploration activity, while continuing to develop new production. Overall, World Oil forecasts regional drilling activity to decrease 9.5%. Western European oil production was down 6.1%, at 2.73 MMbpd.   

Norway continues to accelerate exploration and production efforts, with five new discoveries, including the Ringhorne North, Cerisa and Hassel finds. On Sept. 17, the Johan Castberg FPSO arrived at its namesake field in the Barents Sea, Fig 3. Equinor is now working to connect the vessel to the field’s subsea facilities.  

Meanwhile, the effort to bring on new output to offset a decline in national production is paying off, with the Hanz subsea, Eldfisk North, Kristin South and Balder X fields starting up this year.  The latter two represent ambitions to ramp up production in older assets in the interim while new discoveries are being developed. A 37-block licensing round launched in May aims to keep that momentum.  However, looking at the remainder of the year, World Oil forecasts drilling activity for 2024 to decrease 14.2%. Oil production was down 4.3% in 2023. 

United Kingdom. Despite earlier hopes that the government recognizes the need for fossil fuels, the U.K.’s windfall tax is set to increase 3% and extend a year longer until 2029, and the government may also halt issuing oil and gas licenses. The lead association, OEUK, estimates that such a move, in addition to removal of investment allowances, could lead to an 80% slump in investment.  Further, majors like Chevron are opting to exit the North Sea in favor of pivoting to easier, more lucrative plays. 

Even so, first production is anticipated from the redevelopment of Buchan field in fourth-quarter 2026. Meanwhile, Perenco earlier this year announced successful start-up of natural gas production from its C06 well, a near-field discovery within the Ravenspurn South area of the Southern North. World Oil anticipates that drilling will fall 15%. British oil production slid 11.4% last year. 

EASTERN EUROPE/FSU  

Russia continues to grow activity despite sanctions, and the growth seems to be concurrent with the rest of the region, with non-sanctioned neighboring countries looking to increase their share of the European gas supply market.  World Oil forecasts drilling activity to dip 2% for the region overall, strictly because of a small drop in Russia.  

Russia. In spite of continued sanctions, Russia has maintained a trend of overproduction from 2023, with an estimated excess volume of 480,000 bpd for first-half 2024.  The OPEC+ member has vowed to make production cuts through 2025, to make up for the excess.  The country also anticipates raising crude exports to 239.9 MMmtpa by end 2024—up 0.6% from 2023. After the record drilling effort that they orchestrated in 2023, Russian operators will pull back just a bit this year, but the activity level still remains historically high. Accordingly, World Oil forecasts drilling activity to fall slip 2.9%. Russian oil production during 2023 was off 1.8% at 10.125 MMbpd.  

FSU outside Russia. Activity outside of Russia remains concentrated in Azerbaijan and Kazakhstan.  The former is aiming to supply 20 Bcm of gas to Europe during 2027. And oil production began in April from bp’s Azeri Central East platform, expected to increase to 24,000 bpd through the remainder of 2024. 

Meanwhile, Kazakhstan has faced continued delays in expanding Tengiz field production by 260,000 bopd.  In another project, Technip Energies secured a five-year agreement for development of the Karachaganak onshore field in northwestern Kazakhstan. QazaqGaz and  Chevron signed a five-year seismic data reprocessing agreement that holds promise for future exploration at the Zhalibek site in the Aktobe region, near Zhanazhol and Urikhtau fields. Throughout the FSU outside Russia, World Oil forecasts drilling activity to rise 6.6%. Oil production in the region was down 2.7% in 2023, to 2.71 MMbpd. 

AFRICA 

Namibia’s offshore discoveries remain the focus for African activity in 2024, with onshore prospects in the country sparking interest, as well.  With the surge of activity, surrounding African nations are looking to benefit by boosting production, offering bidding rounds of their own, and accelerating new projects.  Nevertheless, drilling across the region is expected to fall 5.9%. Regional oil production managed to increase 3.4% during 2023, at 6.876 MMbpd.  

Angola. After leaving OPEC+ earlier this year, Angola is striving to achieve production of 1.1 MMbopd until 2027, when the country further aims to boost output to 2.0 MMbpd.  Meanwhile, the next round of a six-year licensing schedule has 29 blocks on offer for first-quarter 2025, with a possible $15 billion in investment by supermajors on the table, thanks to success elsewhere in the region. In the very short run, drilling for 2024 will plummet 51.4% before improving next year. Angolan oil output was nearly flat during 2023, averaging 1.144 MMbpd.  

Egypt. After the excitement of earlier gas discoveries, such as the prolific Zohr field, financial woes have stymied production.  The country now aims to return to regular production numbers by 2025, with $340 million committed, so far, from outside investors looking to do the same. We expect drilling activity to decrease 17.4% for 2024 as a whole. Oil production in Egypt was able to nudge up about 1% during 2023, at 529,327 bpd.   

Libya. Despite ambitions to revive production, Libya has suffered major losses, due to political instability, dropping overall production by more than half during August.  Casualties include the Sharara and Al-Feel fields, with the latter declaring Force Majeure. However, production began to be restored during September, and there were concerns that the global oil market would again be in oversupply. Meanwhile, back in June, state firm National Oil Corporation announced plans to drill well over 100 wells during 2024 and conduct increased maintenance on existing wells. It is part of a plan to increase Libyan oil output to 2.0 MMbpd by the end of 2024. Accordingly, we predict that drilling activity will rise 28.1% this year. Oil output averaged 1.26 MMbpd during 2023. 

Nigeria launched its 2024 licensing round in April this year, expanding to a total 36 blocks on offer in June. The Ubeta Gas Development also launched in Q2, with production start-up slated for 2027, Fig 4.  Despite increased year-on-year production in Q2 (1.4 MMbpd vs. 1.2 MMbpd), the country remains short of its previous 2 MMbpd production benchmark. There are efforts underway by operators to build back output closer to that figure. Accordingly, World Oil anticipates drilling activity to rise 12.1%. Nigerian oil production averaged 1.455 Mbpd, up 9.4%.  

Namibia is an emerging player in African activity, with an estimated 11 Bbbl in crude oil reserves discovered offshore in the Orange basin during 2022.  Promising results have also come from a test well in the onshore Kavango basin this year, with another well planned for fourth-quarter 2024, to target a further 278 MMbbl of oil and 1.5 Tcfg.  The country aims to begin oil and gas production by 2030, if not sooner.  

Algeria. The country looks to increase natural gas exploration and production and remain a key supplier of the fuel to Europe. Accordingly, in June, Sonatrach and Chevron signed a memorandum of understanding to discuss possibilities for hydrocarbon resources development in Algeria. According to Sonatrach, areas of interest identified in the MoU are the Ahnet and Berkine basins. Also, in May, Sonatrach signed an agreement with ExxonMobil to allow the study of opportunities to develop hydrocarbon resources in the Ahnet and Gourara basins. In line with the goal to increase gas production, Algerian drilling has been ramping up steadily over the last two years. Drilling was up 16.8% during 2023, and we expect the number of new wells to rise another 17.2% this year. Algerian crude and condensate output declined 2.3% during 2023, at 1.242 MMbpd. 

South Africa. The Orange basin, shared with neighboring Namibia, remains a focus for South African activity, although interest has fluctuated.  In third-quarter 2024, TotalEnergies and Eco pulled out of offshore blocks 11B, 12B, 5, 6 and 7. TotalEnergies cited environmental concerns and the difficulty of economically developing the gas discoveries as reasons for its withdrawal. 

MIDDLE EAST 

Natural gas continues to be a key focus across the region, with major projects and investment across Saudi Arabia, the UAE, Oman and Iraq, with Saudi Arabia continuing to become a larger player in the sector. Conflict in the region continues to threaten to disrupt activity in or near Israel and Lebanon. World Oil expects regional drilling to increase 7.7%, with 2,833 new wells. Regional oil production was down 3.4% in 2023 at 26.939 MMbpd, due mainly to OPEC+ mandated output cuts. 

Saudia Arabia’s Aramco continues to focus on its goal to grow sales gas production by over 60% by 2030, with over $25 billion in contracts awarded for Jafurah gas field during second-quarter 2024.  This is in addition to the ongoing Master Gas System project: a 4,000-km pipeline critical to the country’s plans for energy transition and domestic gas supply.  Empty Quarter continues to be a source of new activity as well, with seven new discoveries of oil and natural gas representing incremental, added production.  Despite possible future production cut reversals by OPEC+, the country is looking to shift 73% of total investment to non-oil sectors by 2030 to diversify the country’s economy.  World Oil anticipates drilling activity to rise 5.0%. Oil production was down about 9% to 9.8 MMbpd, again due to OPEC+ output cuts. . 

UAE-Abu Dhabi. State firm ADNOC continues to pursue a gas-focused agenda, with ambitions to utilize Ruwais field to more than double current gas production with the Ruwais field LNG project. The double LNG-train project is predicted to boost gas production to 15 MMtpa, with first delivery expected in 2028.  ADNOC also plans to target 220 Bboe and 460 Tcfg of unconventional resources in place, as well as the Zakum oil field, with over $2.4 billion in collective drilling contracts and 144 unconventional wells planned so far, Fig. 5.  Overall, the state-run company looks to increase production capacity to 5 MMbopd by 2027 with $13 billion in investment. World Oil anticipates drilling to rise 11.3%. Abu Dhabi’s oil production was off slightly last year at 3.277 MMbpd. 

Iraq. Despite the closure of the KRG’s (Kurdistan Regional Government’s) export pipeline’s continued closure, Iraq is forging ahead with production.  An agreement with BP is expected by early 2025 to develop 9 Bbbl of oil from the Kirkuk fields—stalled since 2014.  In southern Iraq, gas is also set to be a focus, between a $46 FEED contract for the country’s Associated Gas Upstream project and 13 initialed exploration deals, adding a potential 850 MMscfgd and 750,000 bopd to future production. World Oil expects drilling to increase 3.4%. Iraqi oil production decline 3.0% during 2023, to about 4.3 MMbpd. 

Iran. In spite of continued sanctions, Iran wants to reach the 4.0-MMbpd production level in first-quarter 2025.  That goal might be within reach after second-quarter 2024 production reached 3.6 MMbpd—the highest rate since before U.S. sanctions.  The country also issued $13 billion in contracts earlier this year to Iranian companies, to boost production, with Azadegan field (32 Bboe of estimated reserves) as a point of interest. Iranian oil production last year averaged 3.601 MMbpd, up 10.2%. 

Oman continues to focus on LNG with the Marsa LNG JV project’s launch in second-quarter 2024. Another LNG plant is planned for the Port of Sohar, with 1 MMtpa production to start in first-quarter 2025. Meanwhile, a multi-well drilling campaign continues in Yumna field, and Oman’s OQ initial public offering—the company’s first—is set to raise an estimated $2 billion. World Oil anticipates drilling activity to rise 2.7% this year. Omani oil production was nearly flat during 2023 at 1.05 MMbpd.  

Israel. Despite ongoing conflict in the region, plans for natural gas expansion at Leviathan field offshore are forging ahead, with the goal to boost production to 21 Bcmg (742 Bcf) per year.  Long-term plans include a floating LNG terminal with capacity for 4.6 MMtpa. Meanwhile, the Karish North discovery—with 240.7 MMboe in reserves—began gas production earlier this year. FID also was achieved for the Katlan development, targeting 229 MMboe, with first gas planned for 2027.  

Onshore, Zion Oil and Gas has temporarily suspended recompletion work on its MJ-01 well, due to an unforeseen combination of downhole challenges, logistical constraints, and geopolitical factors. The downhole challenges refer principally to drill pipe that separated and a section of it (a "fish") dropped near the bottom of the hole. Fishing operations will have to occur before the recompletion work resumes. 

Lebanon’s third licensing round is set to continue into Q1 2025, having been pushed back shortly before the June deadline.  Despite a lack of discoveries thus far in Block 9, nine other blocks are on offer. Historical extensions have been attributed to a lack of applications, though the war in Israel along Lebanon’s southern border could likely be a factor.  

FAR EAST/SOUTH ASIA 

China continues to lead activity in the region, with a variety of projects and discoveries boosting record production for state-run companies.  Meanwhile, India, Malaysia and Indonesia boasted discoveries of their own, with development focused on oil for India and gas for the latter two.  World Oil forecasts drilling activity to rise 2.7% across the region. Oil production across the area was up 1.1% during 2023, averaging 6.416 MMbpd. 

China. Exploration and production efforts are a key focus in China, in light of rising demand Fig. 6.  This activity has paid off in the form of collective discoveries across the Bozhong, Kaiping South, Longkou and Lingshui oil fields, as well as in the wider Bohai Sea. Several areas also began production this year, including within the West Sichuan, Bozhong, Enping and Wushi fields. 

According to first-half 2024 reports for CNOOC and PetroChina, the companies boasted production numbers of 362.6 and 905.5 MMboe respectively. CNOOC also noted $5.48 billion income from oil sales in that same period. World Oil forecasts overall drilling activity in China to increase 2.0%. Chinese oil production was up 2.3%, at 4.2 MMbpd. 

India. ONGC announced five oil and gas discoveries—three offshore, two onshore.  The discoveries suggest future exploration success could be found in West Matar field and the Olpad, Kadi and Diu formations. Meanwhile, the country moved a record-setting 45 drilling rigs ahead of the monsoon season, and a deepwater drilling contract offshore received an additional $123 million in backlog. World Oil forecasts drilling activity to fall -3.4%. India’s oil production slipped 1.5%, to just over 603,000 bpd. 

Malaysia. Activity looks to hold steady, with a new oil discovery struck early this year and first gas achieved for Jerun and Kasawari fields. Several PSCs were also signed this year, promising development for five resource clusters, with more than 12 oil and gas fields. We anticipate drilling to decrease 1.7%. Oil production was just under 1%, at nearly 489,000 bpd.    

Indonesia. A May gas discovery raised gas-in-place estimates to 11 Tcf for the South Andaman Block, with first output planned for 2028. Meanwhile, two projects were approved for the Kutei basin, to develop 8.6 Tcfg and 400 MMbbl of condensates among the basin’s estimated 30 Tcfg. Eni has a drilling campaign planned over the next four to five years. Our forecast is for drilling to rise 14.6%. Indonesian oil production was off less than 1%, at 611,300 bpd.  

SOUTH PACIFIC 

With the PNG LNG project FID delayed to 2025, Australia continues to dominate much of the activity in the region, with a persisting focus on gas.  Varied projects are planned to increase production. World Oil forecasts drilling activity to dip 1.4% across the region. The area’s oil production was off nearly 10%, at a little under 335,000 bpd.   

Australia. Despite historical favoring of environmental policies, gas may be seeing a more favorable future, as the Woodside Scarborough LNG project targets first gas for 2026 following the dismissal of an environmental suit. The Shenandoah South project achieved a production rate of 6 MMcfd in first-quarter 2024, and the Surat Gas Project North expansion is slated to add to overall gas production with up to 450 production wells planned, aiming for first gas in 2026, Fig. 7. Overall, World Oil anticipates a 2.3% dip in drilling activity.  Oil production was down about 10% at roughly 281,000 bpd.  

Papua New Guinea. Work on the long-awaited PNG LNG project continues to face a slow path to progress, with FID delayed to 2025 in a decision earlier this year.  Even so, activity elsewhere in the country has made strides, with the Pasca A field project awaiting approval to begin FEED phase 1 development. World Oil predicts a two-well increase in drilling activity. Oil production slipped another 6%, to about 32,700 bpd.