Global energy security making the case for long-term investment in oil & gas
Offshore Energy Today
Offshore Energy - Fossil Energy: Home of Energy Transition ?? Connecting energy security with sustainable solutions ??
While the necessity of bringing down the greenhouse gas (GHG) emissions footprint is undeniable, the expected rise in population growth and increasing energy demand are laying bare the need for enduring investment in all energy sources, including oil and natural gas, to avoid supply shortages and price shocks down the road. Many are convinced the worldwide energy mix cannot survive the trials and tribulations of the future if oil and gas taps are turned off tomorrow. This rising emphasis on worldwide energy security puts hydrocarbons firmly at the forefront of further progress and security of supply even though renewables are destined to continue to take up more and more space in the energy mix.
Every era has its ups and downs but energy experts continue to call for further investment in all sources of supply while highlighting the crucial place oil and gas will continue to play even beyond 2050, as the world works to diversify the energy mix and ensure enough supplies to meet the spike in demand. This, in turn, pinpoints further uptick in new oil and gas as a legitimate goal for the sake of global energy security, given the declining rate of worldwide production from existing assets. Those like 埃克森美孚 are convinced that the security of supply puts the investment in more oil, gas, and LNG on solid enough ground to withstand the test of time.
"The world would experience severe energy shortages and disruption to daily lives within a year of investment ceasing. Given price responses to past oil supply shocks, the permanent loss of 15% of oil supply per year could raise oil prices by more than 400%. By comparison, prices rose 200% during the oil price shocks of the 1970s. Within 10 years, unemployment rates would likely reach 30%. That’s higher than during the Great Depression of the 1930s," outlined the U.S. oil major in its latest view of energy demand and supply through 2050.
While spotlighting the need for investment in new technologies, ExxonMobil also forecasts a fourfold boost in wind and solar power within the energy mix by 2050, however, the company warns that any energy policy to keep oil and gas in the ground would not be just, as these sources are predicted to make up 50% of the energy mix in 2050 with a plateau in oil demand beyond 2030, keeping it steady at above 100 million barrels per day through 2050.
While noting that renewables alongside oil and gas will be key to meet the estimated 15% surge in energy demand by 2050, the U.S. firm underscored: "Yes, changes in the world’s overall energy mix are coming. But the Global Outlook and various third-party scenarios are clear – oil and natural gas will remain essential."
Therefore, if the world is serious about finding ways to be on top of energy demand and pursue affordability by upholding reliability, lower costs, and infrastructure benefits of the current energy system while innovating and upscaling it further as new technologies become available, ExxonMobil's outlook points out that certain technologies and solutions need to be leveled up to keep up the energy demand pace as population goes from 8 billion to nearly 10 billion in 2050.
These entail further inroads in energy efficiency, additional uptick in renewables, and lower-emission technologies, such as carbon capture and storage, hydrogen, and biofuels to reach a low-carbon and carbon-free future on today's wishlist. The U.S. player calls for policies that enable a level playing field for all technologies to compete 'without fear or favor' with governments offering incentives if no market exists and initial costs are deemed too high. Such action is seen as a way to get the ball rolling in the right direction.
However, once these take off, the firm believes such incentives should be discontinued over time as the private sector picks up the torch as markets develop to reach net zero aspirations and curb emissions. Even though ExxonMobil sees "enormous progress" so far, the work is not done yet, thus, it concludes that more remains to be undertaken.
During the quest to decarbonize the energy mix and usher in a more sustainable future, the U.S. energy giant underlines the need to keep several aspects firmly in mind. These refer to all energy types having their place in the mix, renewables continuing to have the fastest growth spurt, coal set to decline the most, oil and gas being seen as 'essential' elements under any credible scenario, and lower-carbon technology still requiring government policy support to up its ante but ultimately the baton must be passed on to market forces.
The energy outlook was summed up succinctly by Darren Woods, ExxonMobil's Chairman and CEO, who laid down the law by saying: “To get serious, three things are needed: supportive public policy, significant technology advancements, and a smooth transition from government subsidies to market-based mechanisms.”
Based on Global Data's report, 237 LNG projects are on the list to start operations from 2024 to 2028, out of which 154 represent regasification projects and 83 are liquefaction projects. While Asia dominates globally with the highest number of LNG regasification projects (99) by 2028, China leads among the countries with 35 regasification projects expected to start operations by 2028. Regarding liquefaction projects, North America spearheads the growth with the U.S. accounting for 26 projects.
Meanwhile, 穆迪分析 new research indicates that oil and gas companies with downstream operations in Europe will likely report significantly lower earnings from these over the next 12-18 months with Preem Holding, Neste , Cepsa , MOL Hungarian Oil and Gas, and ORLEN S.A. anticipated to be among the most exposed while the impact for 壳牌 , TotalEnergies , bp , エニ , Repsol , and OMV is expected to be more balanced.
"Renewable fuel producers are contending with a temporary supply overhang driven by a lot of new capacity hitting the market in 2024. The supply excess follows unusually high renewable fuel margins in the past three years and very supportive legislation mandating medium- to long-term demand increases. Neste, the world's largest renewable refiner has already reduced earnings expectations for its renewable fuel business three times in 2024. However, in 2025 we expect a stabilisation of the market particularly for Sustainable Aviation Fuel (SAF) as the EU mandate for blending SAF into jet fuel kicks in," elaborated Moody's research.
The research also shows that decommissioning costs of mature oil and gas assets have an increasing influence on credit quality for smaller E&P companies in mature offshore basins, thus, this is set to become a significant risk in less favorable market conditions, as the aggregate decommissioning liability for the analyzed companies is $22.4 billion, representing more than 50% of total liabilities for some operators in mature basins.
Since the estimated annual decommissioning costs keep rising, the current indicators point out that they will total ￡2.4 billion a year on average to 2032 in the UK's North Sea. While carbon capture and storage could delay decommissioning costs and diversify business profiles, Moody's findings show this is unlikely to neutralize carbon transition risk exposure.
One of the global problems, which is also an issue oil and gas companies are contending with is cyber threats but the industry is taking steps to come to grips with this as 93% of its players have dedicated cybersecurity employees, and 26% link CEO compensation to cybersecurity performance, both exceeding global averages. Even though cybersecurity spending is constant or increasing across the sector, only 51% of oil and gas issuers have been found to have standalone cyber insurance due to the rise in the cost of cyber insurance premiums, such as those exceeding 300% in the oilfield services segment, alongside limits to the cover offered by insurers.
There is no denying that the oil and gas industry faces multiple challenges, however, Global Data selects the pressure to decarbonize and diversify its products as the largest, driven by climate concerns and increasing carbon taxes imposed by governments, which is perceived to threaten oil and gas companies' profits. The pressure also stems from investors, who are concerned with the long-term profitability of the industry, given the World Economic Forum's forecasts of oil demand being due to peak between 2030 and 2035.
"Low-carbon fuels such as renewable diesel, SAFs, and synthetic fuels offer a route to decarbonization that allows the industry to continue providing products and services to its existing consumer industries, while diversifying its assets and decreasing the risk of its infrastructure becoming obsolete," outlined Global Data.
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? V?r Energi is among players that have disclosed plans for further drilling operations next year, as the Norwegian firm intends to start these activities in the first half of 2025 in the North Sea and commence production from the wells by the end of 2025. The ongoing development projects over the next three quarters are anticipated to enable the company to reach daily production levels of around 400,000 barrels of oil equivalent per day by the end of 2025, sustaining long-term production by developing over 20 early-phase projects.
? Seatrium 's new batch of contracts for repairs and upgrades are going to bring S$100 million, or around $76 million, for work covering carbon capture and storage retrofits, repairs on yachts, cruise ships, LNG carriers, offshore vessels, and tankers, alongside damage repairs. The Singapore player is anticipated to finish the assignments by Q1 2025.
? China National Offshore Oil Corp. has begun production from its latest oilfield development project in the South China Sea off the coast of China.
? Seplat Energy Plc has come one step closer to closing the acquisition of Mobil Producing Nigeria Unlimited (MPNU), a subsidiary of 埃克森美孚 , thanks to the approval from Nigeria’s Minister of Petroleum Resources.
? Yinson Production has sold a partial stake to "K" line (Kawasaki Kisen Kaisha, Ltd) in an FPSO employed by Petrobras on its revitalization project in Campos Basin off the coast of Brazil.
? After starting production from another well offshore Gabon, BW Energy is planning to kick off workover operations at three wells with Borr Drilling 's jack-up rig. Once the rig is done with this work, it will spud another prospect in search of more hydrocarbons.
? A recent ruling by a U.S. federal judge, perceived by the Big Oil lobby and some energy analysts and experts to endanger oil and natural gas activities in the U.S. Gulf of Mexico and even carry the potential to jeopardize and delay the offshore wind leasing program, has been revised to extend the deadline given to NOAA Fisheries to undertake an environmental review of the impacts oil and gas offshore drilling and production have on the endangered species in the Gulf of Mexico.
In response to the change in the court's decision, ???????? ????????????, API - American Petroleum Institute’s Senior Vice President and General Counsel, emphasized: “???? ?????????????? ????? ??????????’?? ?????????????????? ???????????????? ???? ?????????? ???????? ???????? ???????? ???? ???????????????? ?? ?????? ???????????????????? ?????????????? ?????? ?????? ?????? ?????????????? ?????? ???????????????????? ???? ????? ??.??. ???????? ???? ????????????. ??????????’?? ???????????? ???????????????? ???????? ?????????????????? ???????????? ?????? ???????? ?????????? ???????? ???? ???????? ???? ?????????? ?????????????????????? ???? ????? ???????????????? ???? ?????? ????????????’?? ???????????? ????????????.
“???? ?????????? ?????????? ???? ???????? ??????? ???????? ?????? ?????????? ?????? ????????????????’?? ?????????????????? ???? ???????????????? ?? ?????? ???????????????????? ?????????????? ??????? ???????????????? ?????????????????????????? ???????????????????? ?????? ????? ??????????’?? ?????????????? ???????? ?????? ????????????????????, ???????????????? ????????????.”
?The revised final offer, which Hanwha Ocean increased by 11.67% is seen by the independent directors of Dyna-Mac Engineering Services Pte Ltd as acceptable, thus, they recommended to shareholders to accept the cash offer. Since it is predicted that Dyna-Mac could face difficulties in maintaining its market position in an increasingly challenging competitive environment due to macroeconomic uncertainties, volatility in oil prices, and geopolitical risks, ownership under Hanwha is perceived to enable the FPSO builder to advance new technologies and investments in the Singapore energy market while preserving its status as a Singaporean home-grown enterprise.
? MODEC has made further progress in constructing a hull for the FPSO, which will work at 埃克森美孚 's fifth oil project offshore Guyana.
? SBM Offshore has sold a minority stake in an FPSO deployed on Petrobras ' oil field in the Santos Basin off the coast of Brazil.
? Two initiatives have been put into play in Malaysia by PETRONAS to bolster the country’s oil and gas sector and ensure an optimal and sustainable supply for the sake of energy security.
? An FPSO, which is described as the biggest one in SBM Offshore 's fleet has made its way to Brazil to work at Petrobras ' oil field, which is said to be the largest in the world in ultra-deep waters, already accounting for more than 20% of the firm's total production.
? Wood Mackenzie has outlined that the United Kingdom could make use of an additional ￡10 billion of North Sea oil and natural gas value from existing assets as it is at its fingertips if the lack of investment certainty and confidence is addressed and the negative trend reversed to encourage more investments by selecting the right fiscal and regulatory policies and implementing them.
“?????????????????? ?????? ???????????????? ???? ???? ???????? ??????????????? ?????? ???????????? ?????????????? ?????? ???????????? ?????? ?????? ?????????????????????? ?????????????????? ????? ???????????? ?????????? ???????????????????? ??????? ?????????????????? ???? ????? ????. ????? ????????-???????? ???????????????? ???? ??????? ?????????????????? ???? ???????????????????? ????????????????????, ?????? ???????? ?????????????????? ???? ??????????????????, ???? ???? ????????????????? ????? ?????????????????????? ?????????????????? ?????????? ???? ???????? ???? ????? ????????? ?????? ?????? ?????? ?????? ????????????????, ?????? ???? ????? ???? ????????????????????’?? ???????????? ??????????????????," highlighted Fraser McKay, Senior Vice President of Upstream Research at Wood Mackenzie, whose view is shared by Offshore Energies UK.
“????????? ???? ?????????? ?? ??????????? ?????? ????? ???? ???? ?????????????? ???????? ???? ?????? ???? ??????? ???????????????????? ??????????, ???? ???????????? ?????? ?????????? 1 ?????? 2 ????????????, ?????? ?????? ??????????????????????? ???? ????????????? ??????? ??????? ???????? ???????? ?????????????? ????? ????’?? ???????????? ????????????????????. ?????? ????? ???????????? ????? ???????????????????? ??????????, ????? ?????????? ??????????? ?????????????????????????? ????????? ???????? ????, ?????? ???? ?????????????????????????????? ?????? ????? ???????????????? ???? ????? ????????.”
? Oil and gas, renewables, and other clean and green energy plays are perceived not to be all that different, as the UK's energy game will still be played to the same energy security, affordability, and sustainability drum with similar and even same players that feature prominently in the fossil energy landscape, as illustrated in Offshore Energy's most recent op-ed piece, in which ?????????? ??????????, CEO of Aberdeen-headquartered nexos , dives into the United Kingdom's winner-take-all stance on the future of crude oil, natural gas, LNG, and clean energy acceleration - often portrayed as mutually exclusive in the energy transition era.
These views seem to threaten the survival of domestic oil and gas production, as the industry grapples with grueling legal challenges, while energy security concerns, spurred by geopolitical tensions, and net zero transition outcries, sparked by climate change woes, enable certain currents to push the narrative of win-or-lose ideology forward rather than promoting coexistence of all energy plays and emerging low-emission technologies for a balanced transformation of Britain's energy industry.
Allan highlighted: "?????? ?????? ??????, ???????? ????????????, ???? ???? ???????????? ?????? ???????? ???????? ???? ????????. ??????????-???????? ???????????????? ???????? ???? ????????????????, ???????????????? ???????????????? ?????? ???? ?????????? ??????, ?????? ???????????????? ????????, ??????????, ????????????????, ?????? ???????????? ?????????????? ?????? ?????????????? (??????) ???????????????? ?????? ???????????????? ???????? ???????????? ?????? ??????????????. ???????? ???? ???????? ???????????????? – ?? ?????????? ?????? ???????????????????? ???? ????????, ????????????????, ?????? ???????????????????????? ?????? ???????????????????????? ???????????????? ?????? ???? ?????? ?????????? ??????????????."
nexos' CEO also emphasized: "???? ?????? ????, ???? ???????? ?? ???????????? ??????????????????????-?????????? ???????????? ???????????? ???????? ?????????? ?????????? ?????? ???????????????? ???? ?????? ??????????. ???????? ????????, ???? ???????? ???????? ?? ??????????-??????????????, ???????????????????????????? ???????????? ???????????? ???????? ???? ???????? ??????????????. ???? ???????? ???? ???????????????? ?????? ?????????????? ????????. ?????????? ??????, ???????? ???? ?????????? ?????????????????????? ?????? ???????????? ???????????? ???????????? ???????? ???????????????? ???????? ?????????? – ?????? ?? ???? ???????????????? ???????? ?????????? ???????? ???????????? ??????."
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? Noble Corporation , which has a backlog of $6.7 billion and a fleet of 13 jack-ups and 28 floaters, has highlighted what it considers to be the foundations of a prolonged offshore drilling market upcycle. The rig owner sees deepwater oil and gas production growth as “increasingly critical” to global energy supply, as offshore sanctioning activities are on their way to exceeding previous decade highs. The company believes there will be an increase in the floater rig demand from late 2025 and 2026, sparking additional rig reactivations.
? According to Canarship , Island Drilling Company AS ' semi-submersible rig has arrived in the Port of Las Palmas to undergo repairs at Zamakona Yards .
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? Shelf Drilling has obtained the required acknowledgment of compliance for one of its jack-up rigs, which enables the rig to undergo final preparations for its delayed work with Equinor on the Norwegian Continental Shelf.
? With a drilling permit in hand, OKEA ASA will embark on drilling activities at an exploration well in the Norwegian sector of the North Sea.
? Sunda Energy Plc has revised its drilling timeline for an appraisal well at a gas field off the coast of Timor-Leste due to its preferred rig having no available slots in Q1, thus, the spud date has been pushed back to Q2 2025.
? Beach Energy Ltd 's start of production from two wells in the Otway Basin in Commonwealth waters, approximately 65 km southwest of the Victorian coastline, is expected to assist in staving off the anticipated shortages in gas supply.
? Galp has begun its second exploration and appraisal program in the Orange Basin where it made oil discoveries during the first campaign within license PEL 83 off the coast of Namibia, close to previous discoveries made by Shell and TotalEnergies.
? Transocean has fortified its total backlog by lifting it to $9.3 billion, thanks to new contracts and extensions with bp , Reliance Industries Limited , Equinor , Woodside Energy , and undisclosed operators in the U.S. Gulf of Mexico, India, Norway, and Australia for six floaters, covering four drillships and two semi-submersible rigs.
? As Transocean is now reportedly contemplating a business combination with Seadrill , this would create a fleet of 49 rigs. While the former owns or has partial ownership interests in and operates a fleet of 34 MODUs, including 26 ultra-deepwater floaters and eight harsh environment floaters, the latter operates 15 MODUs, covering 12 drillships, one niche semi-sub, and two harsh environment units. Industry sources indicate that a Valaris Limited -Seadrill merger may also be possible along with acquisitions of smaller players into floating rig giants' fleets.
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? Kumul Petroleum has hired Wison New Energies to handle an assignment that will help to bring Papua New Guinea’s first FLNG unit to life for operations that will enable gas to be produced from offshore fields in the Gulf of Papua in Oceania.
? France's GTT (Gaztransport & Technigaz) has won a deal with エニ for technical support services to ensure the efficient operation and maintenance of the liquefied natural gas storage tanks on board its FLNG unit offshore Mozambique.
? Vitol and China Gas Hongda Energy Trading, a subsidiary of China Gas Holdings Ltd have made arrangements for an LNG swap agreement.
? SLNG - Singapore LNG Corporation Pte Ltd has picked Mitsui O.S.K. Lines, Ltd. to operate the first FSRU in Singapore, which is to be built by Hanwha Ocean .
? Nebula Energy will provide the funding its majority-owned AG&P LNG needs to become a member of the Australian LNG club by acquiring Venice Energy , which is developing an import terminal project in South Australia, described as the world’s first floating LNG (FLNG) import terminal that will be powered by 100% renewable energy.
? KN Energies is targeting a final investment decision next year for its LNG terminal electrification project, which will get multimillion-euro support from the European Union.
? EIG -backed MidOcean Energy has increased its interest in an LNG export project in Peru by acquiring an additional stake from Hunt Oil Company . This LNG terminal is considered to be the first LNG export facility in South America and one of only two LNG production facilities in Latin America.
? New Fortress Energy , which recently completed another LNG cargo loading at its FLNG project offshore Mexico and sent it to Puerto Rico, has proposed to continue operating the Puerto Rican LNG import and regasification facility, thus, Federal Energy Regulatory Commission has taken steps to create a draft environmental impact statement regarding the terminal’s impacts on the environment, as it needs to establish whether the project is in the public interest before deciding to greenlight NFE's request.
? Mitsui O.S.K. Lines, Ltd. 's most recent naming ceremony was held for a newbuild LNG carrier at the Geoje Shipyard of South Korea’s Hanwha Ocean . The vessel will be on a time charter contract with Mitsui & Co., Ltd. after final preparations are completed and it gets put into operation.
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? Kongsberg Maritime has picked a new job to supply equipment, including all propulsion, automation, and energy systems for a new fleet of ten platform supply vessels that China's Fujian Mawei is constructing for Greece’s Capital Offshore.
? Altera Infrastructure and Harbour Energy got their hands on €225 million in grant funding from the EU Innovation Fund for a concept perceived to be the first-ever large-scale solution for CO2 sequestration using shared, flexible offshore infrastructure.
? Five years from now it will be time to evaluate what has been accomplished and compare the reality with the 2030 renewable energy targets to see if they were reached, missed, or overshot. While many factors play a role in the outcome, a lot is riding on policymakers and the energy sector itself. Offshore Energy 's Offshore Energy Exhibition and Conference 2024 (OEEC 2024) will dive deeper into this next month, so secure your spot while there is still time.
? 壳牌 and Equinor are two weeks away from facing a court challenge that may derail the development of their two projects, which are considered to be among the largest undeveloped oil and natural gas fields in the UK waters. The government’s decision to step away and refrain from legally defending the approvals for these two North Sea developments coupled with a court ruling that threw emissions generated when the oil is burned into the mix, could put a spanner in the works for the European oil majors. Environmentalists and climate activists are hoping that the ruling will be used to stop Jackdaw and Rosebank along with all new fossil energy projects while also affecting all existing ones to end the era of fossil fuels and accelerate the transition to net zero. On the other hand, energy experts warn that shutting down all oil and gas would lead to supply shortages and a global energy crisis.
? Techouse AS has joined forces with many energy players to develop and test a carbon reduction project. The list of partners in the joint industry project encompasses TotalEnergies and Equinor alongside SINTEF Energy Research . This project aims to end the oil and gas industry’s reluctance concerning retrofitting offshore power generation with a combined cycle to lower fuel consumption and slash carbon emissions at floating and fixed offshore installations.
? While advocating faster decarbonization of energy systems during a recent interview at Bloomberg TV, H?kan Agnevall, 瓦锡兰 's President & CEO, summed up the transformation of the energy sector rather succinctly by saying: “Green is not black or white – there is no single simple solution to the energy transition, and we will need all the tools in the toolbox.”
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