Value Creation from Global Oil and Gas Discoveries Hits Record $33 Billion

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New global oil and gas discoveries in 2022 have driven exploration to its highest value creation in over a decade, with Namibia and Algeria playing a crucial role in meeting this milestone, according to a new market analysis published by global energy market research firm Wood Mackenzie.

The analysis states that value creation from 2022 discoveries reached $33 billion, enabling energy firms and producing countries to add lower-carbon and lower-cost hydrocarbon projects on portfolios and maximized full cycle returns.

While the industry achieved full-cycle returns of 22% at $60/barrel Brent prices, firms excelled in selecting “the best and largest prospects,” a development which will enable both environmental sustainability and energy security needs to be met, according to the analysis.

Meanwhile, national oil companies including Algeria’s Sonatrach and Namibia’s Namcor, and energy majors TotalEnergies, QatarEnergy and Petrobras dominated the market by accounting for approximately three quarters of the new discoveries – of which the highest value from the discoveries were from the deepwater projects offshore Namibia and Algeria.

Despite the fact that exploration wells drilled represented less than half compared to pre-pandemic levels, 2022 discoveries amounted to 20 billion barrels of oil equivalent, thereby matching the annual volumes measured between 2013 and 2019, with the average discovery in 2022 ranging at over 150 million barrels of oil equivalent which is more than double the average of discoveries made in the past decade.

“2022 was a standout year for exploration,” stated Julie Wilson, Director of Global Exploration Research, Wood Mackenzie, adding that “By 2030, fast-tracked development of these new discoveries could deliver 1 million barrels per day in oil and 0.5 million barrels of equivalent per day gas production, generating $US15B in free cash flow.”

The liquids sector represented 60% of the discoveries while gas activities were mainly focused at boosting energy exports to meet growing demand in Europe. While the sector witnessed a decline in exploration spending since 2020 due to the COVID-19 pandemic, Wilson reiterated that 2022 spending per well “increased due to inflationary pressures. Appraisal well numbers increased as companies push towards final investment decisions in this short-term window of opportunity.”

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Nicholas Nhede

Nicholas Nhede

Nicholas is an energy sector journalist with a passion on how technology and diversification of the energy mix can be used to address energy sector challenges. Nicholas holds a diploma in Journalism and Communication studies and has been covering energy-related topics including the Internet of Things, distributed energy and digitalisation since 2015.

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