Rystad: 282 billion barrels to stay in the ground as Covid-19 hastens peak oil

In its global energy outlook, Rystad Energy revealed that the Covid-19 downturn will expedite peak oil demand, putting a lid on exploration efforts in remote offshore areas and as a result reducing the world’s recoverable oil by around 282 billion barrels.

The 2020 release of Rystad Energy’s annual energy outlook claims that global total expected remaining recoverable oil resources would decrease to 1,903 billion barrels

Of that amount, 42 per cent are in OPEC territory, with the remaining 58 per cent located outside the alliance.

Rystad Energy’s head of analysis Per Magnus Nysveen said: “Non-OPEC countries account for the lion’s share of “lost” recoverable resources with more than 260 billion barrels of undiscovered oil now more likely to be left untouched, especially in remote exploratory areas”.

The energy research firm stated in its report that OPEC countries were much more resilient to the current crisis. They will lose only a fraction of their non-OPEC counterparts such as the U.S. and Russia.

“OPEC countries are expected to lose 21 billion barrels of reserves potential as the negative developments in Venezuela and Iran outweigh the increased strength and reserves potential of core OPEC countries in the Arab Gulf region”, Nysveen added.

Rystad also looked at impacts this would have on each region.

In the Americas, the United States will see a lower upstream activity in shale acreage, less exploration in the Gulf of Mexico, and a reduced number of licensing rounds on the Atlantic West Coast. In total, this decreases recoverable resources by 49 billion barrels.

Canada will likely see some 14 billion barrels of high-cost oil sands reserves left in the ground due to increased environmental, social, and governance concerns.

Rystad believes that Mexico will likely see reduced exploration for deepwater and shale oil reserves. Brazil will likely leave more pre-salt reserves in the ground. Also, with no normalization in sight, Venezuela’s actual reserves potential falls further by 21 billion barrels.

Russia will see more of estimated Arctic offshore oil reserves left in the ground due to peak oil demand coming sooner. This will lower the country’s oil reserves by 31 billion barrels.

Similarly, Norway will also have to leave more reserves in the ground in the Barents Sea, due to little exploratory success and the assumption that Covid-19 will bring peak oil demand sooner.

In Nigeria, after a decade-long debate on oil policy reforms, Rystad claimed that potential reserves would fall by a further 6 billion barrels.

With no imminent peace in sight in Libya, future production potential falls by a further 4 billion barrels.

Despite positive news on oil policy reforms in Algeria, its shale exploration potential will fall by 7 billion barrels.

In Angola, Rystad forecasts less deepwater exploration as peak oil demand comes sooner due to Covid-19.

Saudi Arabia came out as the clear winner of the OPEC+ agreement. As such, it will add 25 billion barrels to future production potential despite peak oil coming sooner.

China’s proven reserves are revised lower due to increased drilling while the country’s shale exploration is expected to be reduced.

Rystad also said that the risk of prolonged sanctions to Iran reduced recoverable reserves potential by 18 billion barrels.

As for Australia, the energy intelligence company expects reduced exploration in new basins.

Header photo by SP Mac (under permission from photographer)