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Surge in major upstream projects reaching FID in 2024: Wood Mackenzie

Exploration & Production

Up to 30 major upstream projects could reach FID in 2024, up from 22 in 2023, with Middle East NOCs sanctioning the largest projects, according to a new report from Wood Mackenzie

The Wood Mackenzie report “Class of 2024: benchmarking this year’s upstream FIDs” states that project activity will increase this year, with a total of $US125 bn in investment and the potential for 14 boe up for sanction.

“With many projects delayed or postponed, we expect operators to commit to more projects in 2024 than last year,” said Ross McGavin, principal analyst at Wood Mackenzie. “National Oil Companies (NOCs) in the Middle East will control the most projects, but the Majors will be busy as well, particularly as they prioritise advantaged deepwater resources.”

Project breakevens to fall

According to Wood Mackenzie’s Lens Upstream, as the number of projects rises in 2024, project breakevens are projected to fall, with an associated recovery in returns (IRRs) which dipped in 2023.

“The higher liquids weighting and higher long-term price assumptions will improve IRRs for this year’s projects,” said McGavin. “Most payback periods are less than eight years from FID, as operators focus on rapid execution, lower unproductive capital, and higher returns.”

He added that new projects can contribute to meeting emission reduction goals, especially those focused on deepwater projects that continue to deliver on low emissions intensity and economic returns.