Oil and gas companies significantly slowed the search for new fossil fuel resources last year, report says

LONDON – Major oil and gas companies slowed down sharply in their search for new fossil fuel resources last year, data showed, as lower energy prices from the coronavirus crisis led to spending cuts.

Acquisitions of new onshore and offshore exploration licenses for the five largest Western energy giants have fallen to their lowest in at least five years, according to data from Oslo-based consultancy Rystad Energy.

The number of exploration license cycles fell last year due to the outbreak, while companies such as Exxon Mobil, Royal Dutch Shell and France’s Total also cut spending, Palzor Shenga said, analyst at Rystad Energy.

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“The acquisition of additional leases has a cost and requires the respect of certain work commitments. Therefore, companies would not want to accumulate additional acreage in their non-core business areas, ”Shenga said.

Of the five companies, BP saw by far the largest drop in new acreage acquisitions in 2020. Bernard Looney, who became BP CEO in February, presented a strategy to cut oil production by 40% or 1 million barrels per day by 2030. BP has rapidly reduced its exploration team in recent months.

Major oil and gas companies slowed down sharply in their search for new fossil fuel resources last year, data showed, as lower energy prices from the coronavirus crisis led to spending cuts.

Exxon, America’s largest energy company, acquired the group’s largest acreage in 2020, with 63% in three blocks in Angola, according to Rystad Energy.

Total finished second with two big blocks acquired in Angola and Oman.

Acquiring exploration acreage means companies can search for oil and gas. If new resources are discovered in sufficient volumes, companies must decide to develop them, a costly process that can take years.

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As a result, the decline in exploration activity could lead to a supply shortfall in the second half of the decade, analysts said.