Daily Management Review

Data Shows A 6.3% Fall In Global Oil Supply By 2030 Because Of Project Delays


Data Shows A 6.3% Fall In Global Oil Supply By 2030 Because Of Project Delays
According to data from energy analysts at Rystad, a string of delays to investments by energy companies because of the companies trying to adjust to the continued drop in crude oil prices will result in a drop of 6 per cent in global oil supplies compared to what is expected by 2030.
In order to try and counter the fall in crude prices to record lows due to a supply glut as the coronavirus outbreak destroyed demand, many of the largest oil and gas companies have either cut down on their capital expenditure budgets or have exited projects or have delayed bringing project onshore. 
Rystad said that oil and gas projects typically take years to come on stream and now delayed final investment decisions (FID) for projects have already created an expectation about the shrinking of shrink global supply of oil and gas by 5.6 per cent by 2025. It said that the majority of the revisions in project shave come from shale oil manufacturing segment which is mainly found in the United States
According to reports, after crude oil prices dived into negative territory earlier this week, one of the largest oil producers of the US, Continental Resources, had reportedly stopped most of its production in the US and has informed its customers of its inability to supply oil.
These trends have prompted Rystad to estimate that the global oil and gas supply will shrink by about 6.3 per cent by 2030 compared with the estimates of supply prior to the crash in crude prices.
There has been delay in non-shale projects worth $195 billion, it estimated, and added that most of the delays are gas and gas condensate field developments. In that group, the biggest slump is in the Middle East geographically.
According to energy analysts at Wood Mackenzie (Woodmac), there is a "reasonable chance" of receiving a final investment green light this year for about 10-15 large upstream projects excluding the North American shale sector, which is a level that was last seen during the post-2014 oil price crash.
According to Woodmac, in comparison, a final investment decision this year was scheduled to be awarded for around 50 projects that would have had a reserves of over 50 million barrels of oil equivalent for each project. But that was before crsh in the crude oil prices.  
The developments have also hit liquefied natural gas (LNG) projects.
"2020 was also set to be the record high year for LNG developments. The price crash and dip in global LNG demand delays FID of 7 LNG plants globally," Rystad analysts said in their report.
Royal Dutch Shell even went so far as to completely exit its major Lake Charles LNG in the United States