Although net zero demand and a faster shift to renewable energy will lay the foundation for the industry's peak supply in the next few years, the top energy giants have yet to see their oil and gas production recover from the effects of the COVID pandemic.

According to the analysis of the latest report, after the global oil market was hit by the COVID-19 pandemic last year, the total oil and gas production from the eight largest independent oil giants remained below the pre-COVID-19 level by more than 2.2 million barrels /Day of oil equivalent. Quarterly earnings report.

According to data, as of the end of 2019, the total oil production of ExxonMobil, BP, Shell, Chevron, Total Energy, Equinor, ConocoPhillips and Eni was 13.3 million barrels per day, accounting for approximately total global supply. Of 13%. By the third quarter of 2021, the group's oil production was 11.8 million barrels per day, 11% lower than the level before COVID.

The industry’s oil and gas production has rebounded from a low of 20.3 million barrels of oil equivalent/day in the third quarter of 2020, but the industry’s recent output growth has faced resistance from major European oil giants’ commitments to limit upstream project spending and curb exploration .

BP pledged to reduce its upstream production by 40% by 2030, even if the goal does not include its 20% stake in Russian oil giant Rosneft. Its rival Shell said its oil production has peaked.

TotalEnergies--expected that global oil demand will peak before 2030--expected that natural gas-led projects will increase its upstream production from last year's 2.87 million barrels of oil equivalent/day to 3.3 million barrels of oil equivalent/day in 2025 , But not much higher than 3 million barrels of oil equivalent/day/d in 2019.

The regional divide looks different in the United States, where Exxon Mobil, Chevron, and ConocoPhillips set a net zero target that is less ambitious and allocates more modest capital expenditure plans to clean energy projects. . ExxonMobil predicts that by relying more on its US shale assets, its fossil fuel production will be flat at 3.7 million barrels of oil equivalent per day by 2025. Chevron plans to increase its Permian production to 1 million barrels of oil equivalent per day by 2025, which will increase its upstream production by 15% to approximately 3.5 million barrels of oil equivalent per day.

Another difference between regional players is that European producers pay more attention to natural gas.

The quarterly report shows that during the pandemic, the upstream production mix of major companies in Europe and the United States remained stable. Although many European producers produce close to 50-50 ratios of oil and gas, their US competitors have an average of 60% liquids in their production mix, which is the same as pre-pandemic levels.

With the commitment of US producers to double the development of US shale oil, this disagreement may expand further as major European oil giants continue to target emissions reduction targets with the help of the shift to low-carbon natural gas.

TotalEnergies hopes to grow to 30% oil and 50% natural gas in its sales mix by 2030, with the remaining 20% ​​coming from electricity, biomass and hydrogen.

Market share impact Although the shrinking oil market under the net-zero scenario will significantly change the supply landscape, it will not eliminate the need for continuous investment in upstream projects.

According to data from the International Energy Agency, if you continue to invest in the currently produced oil fields but do not develop new oil fields, the average annual loss of oil supply will be around 4.5%, which is consistent with its net zero energy scenario by 2050.

One of the inevitable results of the withdrawal of oil and gas by Western oil and gas giants is that National Oil Companies (NOC) lost market share. These companies accounted for more than half of global production and nearly two-thirds of remaining reserves. Middle Eastern national oil companies generally enjoy the lowest average development and production costs, and many national oil companies benefit from the low-carbon intensity of their crude oil, making them more resilient to future price fluctuations and low-carbon fossil footprint demand.

According to the reference scenario of S&P Global Platts Analytics, global oil demand is expected to peak in the late 2030s, and the scrutiny of oil and natural gas emissions is becoming more and more stringent. foregone conclusion. Source: Platts Energy Information