ac-webcam-c

twitter linkedinfacebookacp contact us

Exploration & Production

Declines rates are lower in the Middle East than elsewhere. (Image source: Adobe Stock)

Declines in output from existing oil and gas fields globally have accelerated – largely due to a higher reliance on shale and deep offshore resources – but are lower in the Middle East than other parts of the world, according to a new report from the IEA

The new report, 'The Implications of Oil and Gas Field Decline Rates', draws on production data from around 15,000 oil and gas fields from around the world, and highlights the wide variation in decline rates across field types and geographies, with production from larger fields declining more slowly than from smaller fields, and offshore fields declining more quickly than onshore fields. The declines rates for the Middle East and Russia, which are home to the majority of conventional onshore supergiant fields, are therefore much lower than those elsewhere. This could mean that oil production from existing fields would become more concentrated among the OPEC member countries and Russia, who could see their share of global oil production rise from 43% today to 53% in 2035 and more than 65% in 2050, according to the IEA.

In Saudi Arabia and the UAE, where major upstream expansion projects are underway, production growth from approved projects, along with existing spare capacity and continued investment in existing projects, can more than offset the loss of production from natural declines, especially as decline rates are relatively low in both countries.

Onshore supergiant oil fields in the Middle East decline at less than 2% per year, while smaller offshore fields in Europe average more than 15% per year, according to the report. Tight oil and shale gas decline even more steeply: without investment, output falls by more than 35% over one year and a further 15% over a second year. The Middle East has the lowest oil post-peak decline rate at 1.8%, compared with global average annual post-peak decline rate of 5.6% for conventional oil and 6.8% for conventional natural gas.

IEA executive director Fatih Birol noted that nearly 90% of upstream investment annually is dedicated to offsetting losses of supply at existing fields. “Decline rates are the elephant in the room for any discussion of investment needs in oil and gas, and our new analysis shows that they have accelerated in recent years. In the case of oil, an absence of upstream investment would remove the equivalent of Brazil and Norway’s combined production each year from the global market balance. The situation means that the industry has to run much faster just to stand still. And careful attention needs to be paid to the potential consequences for market balances, energy security and emissions.”

The development of new resources would therefore be need to keep up the level of global oil and gas production. Even with continued spending on existing fields, more than 45mn bpd of oil and nearly 2,000 bcm of gas from new conventional fields would be required by 2050 to maintain production at today’s levels, according to the IEA.

The report also highlights that it has taken almost 20 years on average to move from issuing an exploration licence for oil and gas until first production. Around 230 billion barrels of oil and 40 trillion cubic metres (tcm) of gas resources have been discovered that have yet to be approved for development, mainly in the Middle East, Eurasia, and Africa. Developing these resources could add around 28 mn bpd and 1,300 bcm by 2050, the IEA says.

Global shale oil and gas production is set to rise. (Image source: Adobe Stock)

Global shale oil and gas production is set to increase, with Saudi Arabia and Algeria among those countries in the region looking to exploit their shale gas reserves

According to a recent report from leading data and analytics company titled Global Data titled  “Emerging Oil and Gas Shale Plays", notable increases in production are expected over the next few years, including the USA, the current leading producer. These are driven by technological advancements and significant discoveries in countries such as China, Argentina, and Saudi Arabia. GlobalData’s Strategic Intelligence report titled “Emerging Oil and Gas Shale Plays”, reveals that the US was the undisputed leader in global shale oil and gas production with over 80% share in 2024, thanks to its vast reserves, advanced extraction technologies, and supportive regulatory environment.

Ravindra Puranik, Oil and Gas Analyst at GlobalData, commented, “The combination of hydraulic fracturing and horizontal drilling has unlocked unprecedented volumes of shale resources, particularly in formations like the Permian Basin, the Eagle Ford, and the Marcellus Shale. The growth of the shale industry has bolstered the US energy independence, reducing reliance on foreign oil and altering the country's geopolitical strategy.”

Canada holds the second-largest recoverable reserves of shale oil and gas after the USA. It is also ranked second in production due to the technological similarities with its neighbour and government encouragement for unconventional hydrocarbon development.

Argentina is another emerging hotspot for shale oil and gas, particularly the Vaca Muerta formation, which is characterised by strategic asset management by YPF, significant infrastructure investment, and robust growth in production and exports.

Recently, China has made significant progress in shale oil exploration, which could enhance its energy security and reduce dependency on foreign oil supplies, while Saudi Arabia is exploring gas shales within its northern and eastern regions, targeting a 60% rise in its gas output from 2021 to 2030. The focus of development is its giant Jafurah unconventional gas field, the largest liquid-rich shale play in the MIddle East, estimated to hold more than 200 trillion cubic feet of raw gas, which is set to commence production this year.

Algeria, which has significant proven shale gas reserves, is reported to be negotiating with the USA’s ExxonMobil and Chevron, global leaders in shale production, on an agreement that would allow them to explore and develop Algeria's natural gas reserves, including its shale gas reserves. Algeria is seeking to revive its flagging oil and gas sector, on which its economy is heavily dependent, and boost gas exports, with an eye on Europe as it seeks alternative suppliers to Russian pipeline gas.

Puranik said, “The future of shale oil and gas will be shaped by a delicate balance between technological innovation, cost efficiency, and environmental stewardship. Countries that can align production growth with carbon management and energy transition goals will not only secure domestic energy resilience but also strengthen their position in an increasingly competitive and sustainability-driven global market.”

Discovered and recoverable oil resources have increased by 5bn bbl over the past year, according to Rystad. (Image source: Adobe Stock)

Discovered and recoverable oil resources have increased by 5bn bbl over the past year, according to Rystad Energy’s latest research, primarily as a result of potential in Argentina’s Vaca Muerta play and the Permian Delaware basin in Texas and New Mexico

Global recoverable oil resources, including estimates for undiscovered fields, stabilised at approximately 1.5 trillion barrels. However Rystad has revised down its projection of yet-to-find resources due to a steep decline in frontier exploration, unsuccessful shale developments outside the Americas and a doubling in offshore costs over the past five years. Rystad Energy expects new conventional oil projects to replace less than 30% of production over the next five years, while exploration would replace only around 10%.

The world’s proven oil reserves currently amount to only 14 years of production. If future global oil demand increases, as forecast by OPEC, supply will struggle to keep up with demand, even at attractive prices for producers. However, if the energy transition continues to make inroads, future oil demand is expected to fall, particularly with the greater electrification of transport vehicles, as seen in China.

“Full extraction of these oil resources will require oil prices stabilising at higher levels and further estimate increases will require new technologies to lower production costs. Over the next decades, the capital needed will likely not be available to meet continuously increasing oil demand, service prices could skyrocket, and there will likely be limited appetite for innovations to sustain such high emissions from oil,” said Per Magnus Nysveen, chief analyst at Rystad Energy.

If oil demand rises over the next few decades, global recoverable resources will not offer the supply needed to meet it, creating a constrained economic environment that would not be able to compete with less capital-intensive energy sources. As a result, Rystad Energy does not expect oil demand to continue to grow steeply towards 2050.

“In a world with flat or growing demand after 2030, another oil super-cycle would be needed. This scenario would require a substantial increase in frontier exploration and drilling success as well as accelerated deployment of secondary recovery and full-scale development of non-core shale plays in North America and globally,” said Artem Abramov, deputy head of Analysis at Rystad Energy .

Richard Hall, CEO of Dana Gas. (Image source: Dana Gas)

Dana Gas has reported success in the initial stages of its US$100mn investment programme to increase Egypt’s gas production

The US$100mn investment programme, which involves the drilling of 11 new wells, is expected to significantly increase Dana Gas’s long-term production in Egypt and add approximately 80 bcf in recoverable gas reserves over the course of the two-year plan.

The company has received encouraging initial results from the ‘Begonia-2’ appraisal well, the first appraisal well within the Begonia development area in Egypt’s onshore Nile delta and the first of eleven appraisal and exploration wells planned under the investment programme. The well is estimated to contain nine billion cubic feet (bcf) of gas as an initial estimate, which is subject to increase. Begonia-2 will produce an additional five million cubic feet per day. The well is located in the "New El-Manzala" concession and is operated by the  El-Wastani Petroleum Company (Wasco).

The company has also begun to re-complete several wells in other geological layers, which are expected to add more reserves and enhance production. Work is currently underway on the Balsam-3 well, where estimated reserves are 4 bcf, with an anticipated additional production of 3 million cubic feet of gas per day. The successful recompletion of Balsam-3 is expected to reduce the risk associated with drilling exploration wells in the area and further enhance output.

Richard Hall, CEO, Dana Gas, said, “We have been developing and producing gas in Egypt for over a decade, and the signing of the concession area consolidation agreement with the Egyptian Natural Gas Holding Company (EGAS) late last year has allowed us to acquire additional areas under improved financial terms, enabling us to launch this new phase.

“The success of drilling this well opens vast prospects for gas production in the 'Begonia' area and presents promising future opportunities for expansion and growth. It will also extend the operational life of our assets in Egypt. We are fully committed to making every effort to ensure the success of the programme and its efficient and timely execution. Dana Gas reaffirms its strong commitment to reinvesting the payments it receives from the Egyptian government into executing this ambitious programme and supporting future development projects in the country.”

SONATRACH and Sinopec are looking to expand their co-operation through this agreement.

SONATRACH and its Chinese partner Sinopec have signed an agreement with a view to assessing and developing hydrocarbon resources in the Basins of Gourara in south west Algeria and East Berkine in the south east of the country

As part of the agreement, the parties will discuss a work programme for the evaluation and exploitation of these resources, integrating best practices for the preservation of the environment and responsible exploitation of natural resources.

“The signing of this Head Of Agreement expresses the willingness of both parties to bolster their existing relationship and expand their cooperation through new partnership opportunities in hydrocarbons exploration and development,” said SONATRACH in a statement.

Sinopec has been present in Algeria since 2002 and operates the Zarzaïtine field with SONATRACH under the framework of a contract of association focusing on hydrocarbon recovery and development.

Sinopec is also SONATRACH‘s partner under the hydrocarbons agreement signed on 25 February 2025 under  Law 19-13 relating to the exploration and exploitation of the Hassi Berkane perimeter. The two companies signed a production sharing contract (PSA) for hydrocarbon development and exploration worth US$850mn, and will carry out exploration and appraisal drilling on the licence, which lies 80 km from the huge Hassi Messaoud field.

Algeria is rich in oil and gas resources and offers significant potential. It holds approximately 12.2bn barrels of proven crude oil reserves, making it the third-largest in Africa, along with 159 trillion cubic feet of proven natural gas reserves, and is the largest gas producer in the continent. Around two-thirds of Algeria's territory remains underexplored or underdeveloped.

The country is seeking international investment to boost hydrocarbons production. The National Agency for the Valorization of Hydrocarbon Resources (ALNAFT) unveiled six new onshore licensing opportunities for conventional hydrocarbon exploration in 2024, as part of a five-year licensing plan designed to attract global upstream investors. The six opportunities span a cumulative perimeter size of 152,000 sq. km, supported by over 102,000-line km of 2D seismic data and more than 45,000 km² of 3D seismic data.

In June, TotalEnergies, jointly with QatarEnergy, was awarded the Ahara exploration license following the 2024 bid round. It covers an area of approximately 14,900 sq km, located at the intersection of the prolific Berkine and Illizi Basins.

In early July, Sonatrach signed a PSA with Italy’s Eni to explore and develop the Zemoul El Kbar area in the Berkine Basin, around 300 km east of Hassi Messaoud.

More Articles …