The world of oil exploration is undergoing a seismic shift, with global discoveries plummeting to levels not seen in a decade. This dramatic downturn raises critical questions about our future energy supply. But why is this happening, and what does it mean for you? Let's dive in.
In the early 2010s, we were seeing an average of over 20 billion barrels of oil equivalent (boe) discovered annually. However, since 2020, this figure has plummeted to just over 8 billion boe per year, according to Rystad Energy. And the situation is worsening, with the yearly average dropping to around 5.5 billion boe between 2023 and September of this year.
This decline isn't just a random fluctuation; it's a strategic pivot. Exploration and production (E&P) companies are moving away from simply acquiring vast amounts of land. Instead, they're focusing their efforts with laser-like precision on a select few high-potential areas. Think of it like this: rather than casting a wide net, they're using a highly targeted fishing rod. The key regions attracting the most attention include Namibia's Orange Basin, Suriname's deepwater basin, and Brazil's pre-salt basin. These companies are also concentrating on near-field explorations that have existing infrastructure. They are also divesting from less promising areas.
These strategic exploration campaigns combine advanced technologies, cost-effective methods, and low-carbon infrastructure. The goal? To balance risk with the potential for significant returns.
This concentration of activity in specific hotspots – like Namibia, Guyana, Brazil, and Suriname – reveals a narrowing geography of exploration success. It also highlights the risk tolerance of global E&P companies. Frontier nations view this as an opportunity to attract foreign investment. They are offering favorable financial terms to boost revenue and strengthen their energy security. Meanwhile, mature producing nations are looking at under-explored areas, like ultra-deepwater zones and untapped stratigraphic traps, to secure long-term growth and offset production declines.
Over the last decade, we've seen a dramatic shift in where these opportunities lie. This shift has been marked by two transformative events along the South Atlantic margin. The first was the rise of the pre-salt era. This was sparked by Petrobras's discovery of the Tupi field (now Lula) in the Santos Basin off the coast of Brazil in 2006. This discovery redefined global exploration frontiers. The industry demonstrated its ability to image and extract hydrocarbons from beneath thick layers of salt that were previously considered impenetrable. The breakthrough was technological and geological. Improved seismic imaging, directional drilling, and subsea engineering unlocked a play type that had eluded explorers for decades.
The second major frontier emerged in Guyana and Suriname. ExxonMobil's 2015 Liza discovery in the Stabroek Block opened one of the most successful new petroleum provinces of the 21st century. The ExxonMobil-led consortium has found an estimated 13 billion boe of recoverable resources offshore Guyana to date. This is spread across more than 30 discoveries, with another 2 billion boe from Suriname. The third, and most recent, frontier is unfolding in Namibia's Orange Basin. Discoveries by Shell, TotalEnergies, and Galp Energia over the past three years have opened what many consider to be the most promising new petroleum province of this decade. This could accelerate the southern African country's transformation into a major deepwater producer.
Both international oil majors and national oil companies (NOCs) are crucial in sustaining global exploration and discovered volumes. Despite the decade-long decline in conventional discoveries, these two groups collectively account for most new resources found worldwide. This reflects their unique capabilities and strategic priorities. The six major oil companies – ExxonMobil, TotalEnergies, Shell, Eni, BP, and Chevron – account for about 22% of discovered volumes since 2015, according to Rystad Energy estimates. These organizations are the primary drivers of frontier exploration. They use advanced subsurface imaging, digital analytics, and capital strength to open new petroleum provinces. They are also setting new benchmarks for reducing the time between discovery and development. Meanwhile, NOCs are focusing on exploring their domestic and regional basins. They are balancing national energy security with portfolio expansion. Companies like Petrobras, ADNOC, and QatarEnergy are leading exploration efforts. They are working to replace reserves and reinforce their roles as prominent international oil and gas players. Together, the majors and NOCs dominate the high-impact deepwater discoveries that continue to drive global supply growth, while independents and smaller players contribute selectively.
Risk and potential reward are crucial in identifying global exploration hotspots and defining strategic high-impact prospects. Large-scale exploration heavily depends on organizations with deep technical expertise and a long-term investment appetite.
Here's where it gets controversial: Without sustained exploration, supply shortages and price volatility could threaten both energy security and the stability of the energy transition itself. As the world continues to use hydrocarbons while working towards net-zero goals, one thing is clear: we cannot manage a decline in production without making new discoveries.
Underneath the declining discovery curve is a dramatic fall in exploration expenditure (expex). This now hovers around $50 billion to $60 billion per year. This is down from a peak of around $115 billion in 2013. The industry's shift reflects external pressures. These include climate policies, investor scrutiny, and the need to maintain returns. It also reflects internal discipline born from past cycles of over-investment. However, as project pipelines shrink due to reduced exploration activity and lower discovery volumes, exploration and new discoveries remain essential to maintain global oil and gas supply in line with long-term demand.
What do you think? Are you concerned about the decline in oil discoveries? Do you believe the focus on specific regions is a sustainable strategy? Share your thoughts in the comments below!
By Rystad Energy
