E&P outside the U.S. maintains a disciplined pace

It has now been four years since the Covid epidemic spread across the globe and two years since Russia attacked Ukraine. Yet, both items continue to impact the global oil and gas market and its industry. Covid has changed energy use patterns in many countries and spurred the energy transition effort toward renewable energy forms. And the Russia-Ukraine conflict has reconfigured oil sales relationships between various countries, prompted European countries to seek alternative natural gas supplies, and stimulated a fast-growing LNG export effort in the U.S., only to have U.S. President Joe Biden throw cold water on it recently. 

The number of wells drilled outside the U.S. last year totaled 41,584, up 4.5% from the 40,066 wells tallied during 2022. The percentage gain is a bit less than half the 10.1% rate of increase achieved in 2022. It should be pointed out that the drilling increase last year was distributed rather unevenly, with Russia posting its highest well total since the break-up of the Soviet Union, and the Middle East posting a 6.7% gain. In contrast, South American drilling was off 14%, and the South Pacific was barely even. This year, we expect international growth to be led by the Middle East, Africa and South America. 

Given the aforementioned factors, along with World Oil’s surveys of international petroleum ministries and departments, our editorial staff forecasts 2024 E&P activity outside the U.S., as follows: 

• Global drilling, excluding the U.S., will increase 0.8%, Table 1. 
• Global offshore drilling is forecast to gain 3.9%, with gains expected in every region, Table 2. 
• Canadian drilling will decline 3.1%, while Mexican drilling will edge up 2.8%. 
• Six of eight regions are likely to post drilling gains this year.     

Meanwhile, after gaining 4.4% during 20212, world crude and condensate production (Table 3) slowed its growth during 2023 to just 0.7%, averaging 81.944 MMbpd. Over the course of 2023, the U.S. grew its oil production an impressive 1.2 MMbpd to 13.3 MMbpd by the end of the year, compared to the rate achieved in December 2022. 

NORTH AMERICA  

Activity in Canada and Mexico is expected to remain relatively flat, as both countries are dealing with political uncertainty. In Canada, provincial governments in Alberta and Saskatchewan are fighting against what they consider oppressive government energy policies in Ottawa. In Mexico, upstream operations are dependent on an upcoming summer election. Significant discoveries in surrounding countries are pulling focus away from Mexico. The overall expectation is that drilling in North America outside the U.S. will decrease 2.8% this year.  

Canada. Politics continue to create uncertainty in Canada. Alberta’s premier, Danielle Smith, invoked a measure last November to defy federal regulations that aim for a net zero electrical grid by 2035, setting the stage for a legal confrontation between the province and federal Prime Minister Justin Trudeau in Ottawa.  

Despite governmental interference, operators are looking to increase production to fill the Trans Mountain pipeline. ​Additionally, Canadian operators are consolidating to boost recoverable resources, and a new “hot spot” in the co-called Waseca formation has attracted oil drillers, who have applied for 81 licenses in the region as of October 2023.  

Still, oil price differentials in Western Canada are an ongoing issue. Natural gas prices are also very low. Canadian activity will be flat to down slightly. As such, World Oil anticipates that drilling will decrease 3.1% in 2024. Drilling offshore Newfoundland & Labrador will remain level at six wells. Oil production grew an impressive 12.9%, to 5.04 MMbpd. 

Fig. 1. Development of Woodside Energy’s Trion field will be a focal point in Mexico this year. Image: Woodside Energy.

Mexico’s activity is focused on developing Talos Energy’s Zama field and Woodside Energy’s Trion field (Fig. 1), both offshore. Meanwhile, state-owned Pemex has also received approval from the country’s hydrocarbon regulator CNH to drill up to 20 exploration wells during 2024. Private operators are limited to 10 exploration wells.   

The national election in June will have a major effect on Mexico's energy plans, going forward. Front-runner Claudia Sheinbaum isn’t expected to change much oil and gas policy laid out by her predecessor, should she win. As such, companies are looking to more attractive plays in Guyana and Brazil, as new exploration frontiers in Mexico become few and far between. World Oil predicts that drilling this year will be up slightly, at 2.8%. Offshore wells are expected to fall 6.0%. Oil production gained 5.6%, to average 1.95 MMbpd.  

SOUTH AMERICA 

In this region, the spotlight is on Guyana, Argentina, Brazil and, surprisingly, Venezuela. Most of the focus will be on work offshore Guyana and Brazil, as well as up-and-coming shale plays in Argentina and Brazil. Analysts also will be watching whether sanctions that were eased on Venezeula might be reimposed by the U.S., due to problems with a fair election process. Thanks to Guyana, offshore drilling should increase 21.1%. Overall, South American drilling is anticipated to grow 3.1% in 2024. Regional oil output improved 5.6%, to 6.5 MMbpd.  

Fig. 2. A significant portion of Argentina’s activity this year will be in the prolific Vaca Muerta shale. Image: YPF.

Argentina. Most of the country’s activity will center around the prolific Vaca Muerta shale (Fig. 2), estimated to hold over 300 Tcf and more than 16 Bboe. New President Javier Milei is a staunch oil and gas industry advocate, who vows to improve the country’s economy through energy reform. In fact, state-run operator YPF recently announced a campaign to divest holdings in aging fields to focus on shale production from Vaca Muerta.  

Additionally, Equinor in April will begin drilling the country’s first deepwater well off the coast, in water depths of over 1,500 m, putting the area’s exploration potential to the test. The Argerich 1 wildcat will be drilled 315 km (196 mi) from the port of Mar del Plata by the Valaris DS-17 drillship. Equinor estimates that it will take 55 to 65 days to drill the well. Drilling in the country should increase 9.7%, to 850 wells. Oil production averaged 644,100 bpd, up 6.0%. 

Brazil. Activity will start to focus on exploration and development of the up-and-coming Equatorial Margin, off the country’s northeastern coast. Last October, state-run Petrobras received authorization to drill in the region’s Potiguar basin, in hopes of discovering new frontiers following the peak of the country’s “pre-salt boom.”  However, progress may be dampened by environmental authorities, who are keeping parts of the undeveloped basin, specifically the Foz de Amazonas region, under close control.  

Additionally, Brazil’s pre-salt Mero field began production in late 2023. The Libra Consortium, consisting of Petrobras, Shell, TotalEnergies, CNPC, CNOOC and PPSA, are deploying cutting-edge digital twin and CO2 technologies to boost production and extend activity in the area. While World Oil expects overall drilling in Brazil to increase slightly (1.8%), offshore drilling will increase 3.5%. The country’s oil production rose an impressive 10.3%, averaging 3.33 MMbpd.  

Guyana will continue to dominate the headlines, as multiple discoveries with significant resources begin development. ExxonMobil, along with Galp Energia, Fronterra Energy and CGX Energy made large finds offshore Guyana. In addition, ExxonMobil’s third major project, the Payara development, went onstream in November 2023. The company also has its fourth and fifth major projects, Yellowtail and Uaru, in progress. A sixth project, Whiptail, is being negotiated with the government. Accordingly, by the end of 2027, ExxonMobil anticipates having six FPSOs operating on the Stabroek Block offshore Guyana. 

ExxonMobil recently unveiled plans to drill exploration wells west of the prolific Liza discovery. Additionally, Chevron entered the country with its historic acquisition of Hess Corporation in the tail end of 2023. However, activity could be curtailed by building tensions between Guyana and neighboring Venezuela. Still, World Oil expects drilling in the country to increase a whopping 94.4%. Oil production increased 10.3% in 2023 and will be up noticeably this year, given full implementation of Payara’s output. 

Colombia’s E&P activity has been on a steady decline since Gustavo Petro became president in August 2022, thanks to tax reforms and a so-called “green” agenda. While certain measures have been dropped recently from the tax reform, drilling still appears to be following a downward spiral.  

State-owned Ecopetrol revealed plans to increase onshore production slightly, and even made a deepwater discovery with partner Shell in 2023. According to Ecopetrol, drilling of the Glaucus-1 wildcat in Block COL-5 was a success, confirming the existence of a gas province in Caribbean waters. NG Energy also has ambitious plans for 2024, anticipating an eight-fold increase in natural gas production from the Lower Magdelena basin as the Sinu-9 block is brought onstream. Still, governmental interference seems to outweigh progress, as World Oil expects a 24.2% decrease in Colombian drilling activity. Oil production averaged 775,400, up 4.0%. 

Venezuela. U.S. President Joe Biden eased oil and gas sanctions against the country during second-half 2023. As such, companies like Chevron, Eni, Repsol and others have returned to the country in hopes of beginning new drilling campaigns. Analysts think these campaigns could generate a 25% increase in production, equating to roughly 200,000 bopd. However, sanctions relief may be short-lived, as Venezuelan President Nicolas Maduro fails to uphold his end of the deal. There are concerns about potential fairness of the next election round this year. 

Additionally, tension is rising between Venezuela and Guyana, as they are embroiled in a centuries-old border dispute. Venezuela has threatened a “forceful” response to ExxonMobil’s plans to drill near the disputed region; however, the IOC assured that drilling will only occur in recognized Guyanese waters. Even with all of this uncertainty, World Oil projects a doubling of Venezuelan drilling during 2024, albeit at low double-digit levels. Oil production rose 6.3%, to 748,500 bpd. 

Trinidad and Tobago. The country relies on oil imports, even as the Manatee offshore gas field continues development. Much work is being done to survey new offshore exploration frontiers, with TGS and PGS conducting seismic surveys and reprocessing past data. World Oil predicts a 14.8% decrease in overall drilling activity during 2024. Offshore wells will rise from two to three. Crude and condensate production dropped 8.7%, to 53,300 bpd.  

WESTERN EUROPE 

In 2024, Western Europe’s focus continues to be on energy security. While leadership has imposed an extreme political agenda to curb emissions, the region is still looking for alternative supplies in the wake of Russia’s invasion of Ukraine. Accordingly, upstream activity will focus on offshore exploration and improving operations in mature North Sea fields. World Oil expects regional offshore drilling to increase 5.1%, and overall regional drilling to increase 7.6%. Regional oil production slid 5.9%, to 2.79 MMbpd.  

Fig. 3. One of the 14 discoveries struck offshore Norway during 2023 is a well drilled from the Oseberg C platform. Image: Norwegian Offshore Directorate/Equinor.

Norway. Drilling here, all offshore, will rise 5.9%, as operators increase output from mature North Sea fields and develop new exploration licenses. In December 2023, the Norwegian Petroleum Directorate reported that 65% of natural gas resources in the Norwegian North Sea are still unproduced. Of 33 Norwegian exploration wells drilled in 2023, 14 yielded discoveries, Fig. 3. To fill in supply gaps created by Russia’s invasion of Ukraine, companies like Neptune Energy are looking to fast-track recent discoveries to produce first gas in 2024. Overall, Norway is expected to invest $23 billion in offshore spending this year. Norwegian oil production averaged 1.80 MMbpd, down 4.9%. 

United Kingdom. Despite intentions to be "net zero" by 2050, the UK still relies heavily on oil and gas for energy security. However, politicians with extreme agendas continue to deter investment in domestic energy production. The Labour Party has committed to extending the country’s windfall tax, which industry trade groups have warned would have alarming impacts on the UK economy. 

Still, World Oil predicts that drilling in the country will be up 5.6%. The country’s most recent licensing round is empowering IOCs like Shell, Equinor and bp to begin exploration campaigns in the North Sea. In fact, the UK announced that licensing rounds will be mandated annually to keep up with demand, which is straining supply following Russia’s invasion of Ukraine.  

EASTERN EUROPE/FSU 

While overall regional activity may decrease, offshore drilling is set to rise 9.3%. Upstream operations in Eastern Europe/FSU will depend more heavily on developing assets in Kazakhstan and Azerbaijan. Russian activity will, in part, be curtailed by OPEC+ obligations to cut production, but operators are also digesting their heavy drilling last year. World Oil predicts regional drilling overall to decrease 2.7% in 2024. The region’s oil production was off 0.8%, to 12.99 MMbpd. 

Russia. This OPEC+ member pledged to cut production by 500,000 bpd until the end of last year, to help shore up markets alongside group leader Saudi Arabia. Even with this underway, Russian operators drilled their greatest well total since the Soviet Union broke up at the end of 1991. 

Still, activity is expected to decrease 4% in 2024. Some of this is mostly due to Western sanctions, which were imposed following Russia’s invasion of Ukraine. However, operators also need to catch their collective breath and sort out their production gains from last year’s frenzied drilling. The country’s oil production slipped 1.6%, to 10.15 MMbpd.  

Fig. 4. State firm Socar continues to pursue drilling targets at its giant Absheron field offshore Azerbaijan. Image: Socar.

Other FSU. In other parts of the region, Azerbaijan is pursuing drilling targets at its giant Absheron field offshore, Fig. 4. While the first phase of development, achieved in July 2023, started producing at. 1.5 Bcmg per year, the second phase of development will raise targets to 5.5 Bcmg per year. This expansion is in line with the country’s goal to increase European gas supplies.  

Notably, Azeri Ecology Minister Mukhtar Babayev was named as the next president of COP29. His appointment has drawn some criticism, much like that of COP28 President Dr. Sultan Ahmed Al Jaber, Special Envoy for Climate Change of the UAE. However, it does not seem unreasonable for oil-and-gas-producing countries to share in hosting climate talks to bring balance to the energy transition narrative.  

In Kazakhstan, the country’s Energy Ministry said that oil production from giant Tengiz oil field —operated by Chevron-led Tengizchevroil—will remain level in 2024 with the 2023 plan. The Energy Ministry told Reuters that it forecasts oil output from Tengiz will reach 27.9 million tons this year (about 608,000 barrels per day), a level similar to 2023's output but roughly 4% below that of 2022. 

Ukraine regained control of key offshore drilling sites in the Black Sea last September, following Russia's invasion. Russia first occupied the Petro Godovenets and Ukraina drilling platforms in 2015, which were intended to bolster Ukrainian production. The country has also taken steps to strengthen it’s energy independence by adopting API standards for its oil and gas operations. We expect Ukrainian drilling to increase 27.1% this year. 

Throughout the FSU outside Russia, World Oil expects drilling to gain 9.5% and total 1,099 wells. 

AFRICA 

Fig. 5. A significant amount of Africa’s oil production is produced from FPSOs, like this one operating offshore Gabon for BW Energy on the Dussafu license. Image: BW Energy.

In 2023, Angola and Nigeria took the lead in sub-Saharan hydrocarbon drilling, with the former aiming to maintain production into 2024.  Indeed, drilling offshore Africa is set to be a focus this year, increasing 3.7% to 335 wells, with confirmed oil discoveries offshore Namibia likely to be appraised further and developed.  Drilling overall across the region is expected to grow 5.1%, with an estimated 1,121 new wells. Regional oil production was up 3.4, to average 6.7 MMbpd. 

Angola left OPEC, effective January 2024, to raise 2024 production 100,000 bpd above OPEC quotas.  New exploration offshore in the Lower Congo and Namibe basins—with confirmed oil discoveries in the latter—aims to counter a pattern of production decline since 2008.  World Oil anticipates drilling to increase 3.4%. 

Egypt. Gas remains an area of focus, with 35 total gas exploration wells to be drilled by 2025, some of which resulted in the Narges (2.5 Tcfg) and other discoveries last year. Approximately $1.2 billion in agreements—involving 87 new wells—were signed in 2023 as well, while the country looks to boost Zohr field’s current 2.2-Bcfgd production with a 25-well drilling campaign. Drilling throughout Egypt is expected to increase 2.1%. 

Libya aims to revive production, with ambitions for 2 MMbopd by 2030.  With a new licensing round to be launched by NOC this year and an increase in overall monthly production from 1.12 to 1.2 MMbpd by end-2023, that goal might be in reach.  The country boasts gas reserves of 53 Tcf but is struggling to utilize it. Drilling is expected to increase 7%. 

Nigeria. Despite previous exits by majors, Nigeria looks to boost exploration, production and refining activity.  Various pending projects could aid ambitions for 2.6 MMboed by 2030, but historical delays suggest production more likely will be 1.9 MMboed by 2030.  Meanwhile, the country launched its own “Nembe” grade of crude and anticipates a $1 billion investment from Shell over the next five to ten years. World Oil anticipates drilling to rise 7.5%. 

South Africa. Despite previous goals to cut emissions, South Africa looks to prioritize exploration and power generation.  Following approval for a five-well exploration drilling campaign offshore in second-half 2023, the industry is hopeful that future legislation will continue to be favorable.  Drilling is expected to go from no drilling to at least three wells. 

MIDDLE EAST 

The drilling increase across the region is led by several multi-year projects in Saudi Arabia, Abu Dhabi, Kuwait and Qatar. Gas will continue to be a focus across the region, despite continued conflict in the area, with Saudi Arabia as a burgeoning player in the field. World Oil anticipates drilling to increase 5.5%, with 2,649 estimated new wells, while offshore drilling will increase 9.1% to 265 wells. Regional oil production was down 2.9% at 26.9 MMbpd, due mostly to the deliberate output cut by OPEC+. 

Saudi Arabia looks to make gas a key area of focus, with ambitions to increase current gas output by more than half by 2030. Already in pursuit of this, Aramco also produced its first unconventional gas from the South Ghawar area and added two natural gas field discoveries in second-half 2023.  Meanwhile, deliberate production cuts sustained during 2023 as part of an OPEC+ agreement are continuing into 2024. In addition, Aramco was told by the government in January to halt its oil expansion plan and to target a maximum sustained production capacity of 12 million barrels per day (bpd). Drilling is expected to rise 8.4%, with offshore drilling jumping 15.9% higher. Oil production in the kingdom was down 6.9%, at 9.95 MMbpd. 

Fig. 6. Onshore Abu Dhabi, an aggressive drilling campaign by state firm ADNOC continues. Image: ADNOC.

UAE-Abu Dhabi. In keeping with prior trends, Abu Dhabi looks to make gas and CCUS projects a key focus, with around $17 billion in contracts awarded last year. Oil output is also set to surge during 2024, as state firm continues an aggressive drilling program, Fig. 6. Production last year averaged 3.14 MMbpd, down 1.6%. Meanwhile, ADNOC plans to stick to goals for net zero by 2050, with additional targets added in fourth-quarter 2023 as part of a low-carbon partnership with SOCAR, including zero methane emissions by 2030. World Oil anticipates drilling to increase 7.8%, while offshore wells drilled should rise 8.9%. 

Iraq. The Iraqi Kurdistan pipeline dispute begun in March 2023 remains stalled into early 2024, with an estimated $7 billion in lost revenue as of last November. Meanwhile, a deal with UAE’s Crescent aims to develop three oil and gas fields and begin producing 400 MMcfgd within the next two years.  Drilling in the country is expected to grow 4.5%. Countrywide oil output rose 7.9%, averaging 4.3 MMbpd.  

Oman extended several LNG contracts in 2023, pushing back the original end dates from 2025 and 2026 to 2034 and beyond, allowing for new partners as well.  A joint venture, involving two LNG trains with capacity for 3.8 MMtpa each, was also extended to 2034. Meanwhile, the country’s OQ Gas Networks is looking at an initial public offering of $711 million, which would be the largest IPO in the Iran’s history. World Oil anticipates drilling to increase 1.6%, while no offshore drilling is expected this year. 

Iran. Despite sanctions continuing to put a damper on export activity, Iran exported record-high numbers to China’s small refiner market, peaking at 1.45 MMbpd and averaging 1.05 MMbpd over most of 2023. The Kish gas field project is in the commissioning stage and should start commercial production during 2024. Operated by Pars Oil and Gas, Kish is a conventional gas development located in a water depth of 328 ft. The field was discovered in 2005.   

Israel. Despite ongoing conflict in the region, Israel has largely resumed gas exports and production that were disrupted in second-half 2023, though a $2 billion bid on NewMed by BP and ADNOC remains delayed. Meanwhile, the country awarded 12 gas exploration licenses offshore, and Chevron looks to expand operations in Leviathan field while raising Tamar field exports back up to previous levels.    

Lebanon continues to focus on offshore drilling, with its third licensing round underway for several offshore blocks.  Meanwhile, the country looks to continue exploration drilling of its own in Block 9, despite a lack of discoveries, thus far.    

FAR EAST/SOUTH ASIA 

China accounts for 89% of drilling in the region and will continue to lead global oil demand growth in 2024.  Indonesia aims to ramp up gas activity, following a collective 11 Tcfg in discoveries last year, while Malayasia is similarly occupied with 22 discoveries from 2023, adding 1 Bboe to reserves.  Drilling is set to increase 2.9% across the region, with 18,264 new wells, while offshore drilling is estimated to rise 1%, 1,311 wells. 

Fig. 7. Offshore drilling and development, conducted under the auspices of CNOOC, remains an important component of China’s goal to expand its domestic production. Image: CNOOC.

China’s oil demand and imports continue to rise, as the country looks to secure greater supply for its refining sector; namely, PetroChina hopes to resume greater imports from Venezuela, and Sinochem began purchasing at the start of paused U.S. sanctions.  China also hopes to increase cooperation with Gulf countries, with a QatarEnergy LNG supply deal already signed.  Domestic production of natural gas looks to increase slightly, with first production from a Bohai Sea gas field (200 Bcmg of proven reserves) in 2023 and a new oil and gas discovery find announced in November. We anticipate drilling to rise 3.1%, with offshore drilling expected to increase 1.8%, Fig. 7. Oil production managed to achieve a 2.5% gain, averaging 4.19 Mmbpd. 

India. Given continuing high petrol prices, and with energy consumption growing 3.8% per year, India looks to bolster supply. The country resumed Venezuelan oil imports last year, with 4 MMbbl of crude purchased so far, though Russian imports dipped in third-quarter 2023. Meanwhile, Oil India announced a 60-well campaign in August 2023, and a variety of tax cuts and project approvals are encouraging for future industry activity.  Drilling is expected to rise 3.1%, with offshore drilling set to increase 6.8%. 

Malaysia. During 2023, 22 discoveries added a cumulative 1 Bboe to Malaysian reserves through various drilling campaigns. The year also saw various seismic projects to promote future exploration and discoveries. Drilling is expected to increase 6.8%, with offshore drilling to rise 8.6%. 

Indonesia added 11 Tcfg to reserves with two major discoveries in 2023.  Combined with approval for the long-delayed Abadi Masela gas development, conditions look favorable for the country’s natural gas sector during 2024. Drilling is expected to increase 1.8%, with offshore drilling to grow 3.4%.  

SOUTH PACIFIC 

Australia continues to lead the region in activity, though recent offshore exploration permits face legal hurdles.  Meanwhile, Papua New Guinea looks to take FID on the 6-Mtpa Papua LNG project in 2024. Regional drilling is expected to increase 6.8%, to 298 wells, with offshore activity expected to rise 72.7%, to 19 wells. Regional oil output averaged 332,300 bpd, down 10.7%. 

Fig. 8. Chevron’s Wheatstone LNG Processing Facility was one of the sites hit by a workers’ strike last September. Along with the Gorgon Project, it collectively represent 7% of global LNG supply. Image: Chevron Australia.

Australia. Legal roadblocks were a key concern for Australian operators in 2023, between strikes at the Gorgon and Wheatstone (Fig. 8) facilities and environmental permit hurdles preventing completion of the 2023 bidding round for offshore exploration.  Even so, Santos’s $4.3-billion Barossa gas project received approval after earlier legal delays, and Australia’s offshore well count is predicted to enter double digits in 2024, doubling last year’s count.  Drilling overall is set to increase 5.3%. Oil production slipped 10.4%, to 278,500 bpd. 

Papua New Guinea. FID for Papua New Guinea’s 6-Mtpa LNG project is expected this year. While drilling will increase 40% this year, the well count will not leave the single digits. No offshore drilling is expected this year. Oil production dropped 6.9%, to 32,300 bpd.