As the EU moves forward with its energy and climate agenda, oil will continue to play an important part in the energy mix. The responsible exploration and development of Europe’s own resources has the potential to secure energy supply and government revenues for decades to come.
The International Association of Oil & Gas Producers (IOGP) asked the international energy consultancy Wood Mackenzie to conduct an analysis of remaining oil volumes in Europe.
The main findings of the report are summarised below.
Outlook for the European upstream oil sector
With 32.5 bnboe of existing and potential resources, Europe can sustain current oil production levels for 13 years to 26 years if it prioritises new technologies, cooperation and exploration.
Today, Europe imports around 70% of its oil demand (9.2 mmboe/d).
Europe holds 25.3 bnboe of commercial and technical resources, and an estimated 7.2 bnboe of Yet-To-Find resources. Unconventional reservoirs (not included here) have the potential to add additional resources.
By 2040, Europe could supply up to 1/3rd of its own oil if it prioritises domestic production, creating jobs and promoting an engineering skills base.
Exploration performance and competitiveness
With 20% of expected global exploration investments, as well as a series of recently successful licensing rounds, Europe remains a highly attractive region for oil & gas producers.
Exploration success rates in Europe have now surpassed the global average, driven by technological advances and operational efficiency.
While the North Sea continues to dominate Europe’s production and resource outlook, South-Eastern Europe and the Eastern Mediterranean hold promising potential.
In a recent trend, the oil and gas majors explore new frontiers, while new entrants, bring new skills to mature fields. Expectations for new finds are on the rise, encouraged by recent discoveries.
Around €50bn in exploration spend is expected in Europe between 2016 and 2025.
Europe can draw upon significant domestic oil resources to meet part of its own demand in a lower-carbon future, while having one of the most successful rate of discoveries in the world and lower environmental impact.
These resources will improve Europe’s security of supply and industrial competitiveness, generate substantial government revenues (€35bn in 2015), and retain a highly skilled workforce.
Governments and Regulators can maximize the use of these resources by:
- Fostering strong collaboration between regulators and industry to removing operational and commercial barriers.
- Ensuring the effective implementation of the existing Offshore Safety Directive, before considering developing new rules.
- Supporting new exploration through licensing rounds to mitigate the rate of decline in European production.
- Maintain a responsive fiscal framework incentivizing new exploration, to then reap the benefits from potential production.
1 IEA, World Energy Outlook 2017, pp.668-669