Wood Mackenzie analysis reveals that 30 of the world’s largest oil and gas companies face a combined 22 million barrels of oil equivalent per day production shortfall by 2040 to maintain their market share of oil and gas demand.
That’s what Wood Mackenzie stated in a release sent to Rigzone on Thursday. In that release, Wood Mackenzie noted that the group of 30 companies collectively produces around 50 million barrels of oil equivalent per day, meeting close to 30 percent of global demand, but added that its latest report expects production from current commercial projects for these 30 companies to fall nearly 40 percent between 2025 and 2040.
“Filling the 22 million barrels of oil equivalent per day gap is the equivalent to adding nearly two Permian basins or 14 Guyana-scale plays,” Wood Mackenzie highlighted.
“The main industry players can’t spend their way out of the problem,” the company warned.
“With capital discipline and shareholder distributions now a defining feature of how companies are valued, in what is fundamentally a maturing sector, companies are under pressure to return between 30 percent to 50 percent of operating cash flow to shareholders through dividends and buybacks,” it added.
In the release, Neivan Boroujerdi, Director, Corporate Research at Wood Mackenzie, said, “Big Oil is recalibrating back to upstream, but years of reduced activity has left many oil and gas companies with production profiles more aligned with net zero pathways than the higher for longer scenario that is playing out”.
“The core strategic challenge is how to sustain output and cash flow when reinvestment rates are roughly half of mid-2010s levels,” Boroujerdi added