LONDON (Reuters) – The best oil and gas companies have sharply delayed their search for new fossil fuel resources last year, according to data, as lower energy prices caused the spending cuts due to the coronavirus crisis.
The data from the Oslo-based consultancy firm Rystad Energy showed that the acquisition of new rural and foreign exploration licenses for the five largest Western energy giants had dropped to the lowest in at least five years.
The number of licensing rounds for exploration declined last year due to the epidemic, while companies such as Exxon Mobil, Royal Dutch Shell and France also reduced their total spending, Rystad Energy analyst Palzor Shenga said.
“Obtaining additional leases has a cost and it requires that some work obligations be met. That is why companies do not want to accumulate extra space in their non-core operations, ”Shenga said.
(GRAPH: Slower exploration – here)
Of the five companies, BP saw by far the largest decline in new surface area acquisition in 2020. Bernard Looney, who became BP’s CEO in February, set out a strategy to reduce oil production by 4030 or 1 million barrels per day by 2030. has rapidly scaled back its investigation team over the past few months.
Exxon, the largest U.S. energy company, acquired the largest area in the group in 2020, with 63% in three blocks in Angola, according to Rystad Energy.
Total was second with two major blocks acquired in Angola and Oman.
By acquiring exploration areas, companies can search for oil and gas. If new resources are discovered in sufficient quantities, businesses have to decide whether to develop them, an expensive process that can take years.
Analysts said the decline in exploration activity in the second half of the decade could lead to a gap in supply.
(Graph: spending on oil heads – here)
Reporting by Ron Bousso; Edited by Alexander Smith