Upstream Tracker: Petrobras, Saudi Aramco Lead Medium-Term Capacity Growth

Petrobras is poised to bring more crude oil production capacity on line outside the US than its international peers in the medium term, according to Energy Intelligence’s assessment of global oil-field projects, a new product that will be regularly updated. In second place is Saudi Aramco, followed by Equinor and Exxon Mobil.

The results are based on field operatorship and not equity stakes. The new capacities will help offset natural declines at existing fields.

In the outlook for non-shale US capacity growth, Royal Dutch Shell and Chevron are virtually neck-and-neck for the lead over the 2022-26 period, followed by BP. Together these three majors will account for nearly three-fourths of new production capacity, based on operatorship, in the Gulf of Mexico, Alaska and conventional US plays.

Our analysis shows that North and South America will dominate geographically in terms of new non-Opec-plus capacity throughout the decade. Exxon, for instance, is going all-out in South America for future oil production capacity. In comparison, TotalEnergies’ new equity barrels are spread across four continents, although heavily weighted toward South America.

Pre-Salt Breakout

Based on field operatorship outside the US, the clear front-runner in rolling out new crude capacity in 2022-26 is Petrobras. The Brazilian state-owned firm, our assessment shows, will increase output capacity by 1.8 million barrels per day over the next five years. Petrobras will effectively launch a new floating production, storage and offloading unit per year in a headlong drive to tap the vast pre-salt reserves and become one of the world’s largest producers by 2030.

Saudi Aramco, the world’s largest producer, will launch 1.25 million b/d of new capacity in 2022-26 starting in late 2023, powered by the massive 600,000 b/d Zuluf and 300,000 b/d Marjan expansions. The kingdom ultimately wants to boost capacity to 13 million b/d, if not more, in the second half of the decade.

In third place is Norway’s Equinor, which will roll out 970,000 b/d of new production capacity outside the US, in large part due to the 220,000 b/d Johan Sverdrup Phase 2 scheduled for the fourth quarter next year and the 200,000 b/d Johan Castberg project, which should follow a year later.

In its role of operator outside the US, Exxon will bring 780,000 b/d of new capacity on line in 2022-26, while Rosneft’s new capacity rollout is assessed at 619,000 b/d. The Russian major’s ambitions are considerably greater — its Vostok Oil megaproject alone is targeting 2 million b/d of output — but our study indicates the state-controlled producer will encounter myriad financial, logistical and technical hurdles in its efforts to tap remote reserves in the Arctic. Rosneft’s new capacity will grow much more, but beyond 2026.

Abu Dhabi National Oil Co. (Adnoc), which earlier this year threatened to scupper the Opec-plus production deal over a capacity-related dispute, is poised to boost capacity by 600,000 b/d, according to our assessment.

Finally, Total will lift oil production capacity by 310,000 b/d outside the US, with the bulk materializing toward the end of the period under review.

Gulf of Mexico Wanes

In the US, the world’s largest oil producing country, new medium-term capacity is assessed at 2.4 million b/d. Some 60% of this will come from unconventionals, nearly 40% from deepwater Gulf of Mexico, and a smattering in Alaska.

It is crucial to note that beyond 2025 we currently see no new production capacity in the Gulf coming on line. Meanwhile, by 2026 new shale capacity is currently forecast to dwindle to 40,000 b/d. This, of course, could change if sustained demand keeps prices, and hence, E&P budgets, on a high level, particularly in short-cycle shale.

For this analysis, we did not break down new medium-term shale capacity by operatorship, where Exxon and Chevron plan major investments. Looking at the Gulf and Alaska, Shell, as operator, is on track to bring 250,000 b/d of capacity on line in 2022-26, and Chevron 245,000 b/d. BP is third with 200,000 b/d, followed by Murphy Oil and Beacon Offshore Energy — each with 80,000 b/d of new capacity over the period, our assessment shows. LLOG Exploration will add 54,000 b/d to the mix.

Majors Favor South America

A comparison of capacity ownership at two publicly owned majors, Exxon and Total, is worth noting in the context of new medium-term capacity. In 2022-26, and including the US Gulf and Alaska, Exxon will acquire 632,000 b/d of new capacity globally, compared to 375,000 b/d for Total.

Geographically, however, the two majors will have starkly different upstream strategies. Exxon will source 70% of its new medium-term barrels toward South America, and starting in the second half of 2024 nearly all of its new equity oil will originate there — with the exception of a project in the United Arab Emirates.

Total, to be sure, will get some 53% of its new oil from South America, but the French major has additional exposure to Africa, the Mideast, Norway and the US. What’s more, time-wise the oil is distributed across the five-year period under review.