April 4, 2022

WWW.ENERGYINTEL.COM

Upstream Tracker: Medium-Term Capacity Growth Improves

  • New global oil production capacity slated to come on line in 2022-26 is estimated at 2.4 million barrels per day per year.

  • Just over two-thirds of this new capacity, or 1.7 million b/d per year, will come from countries not aligned with the Opec-plus group.

  • Regionally, North America will roll out the most capacity on an average basis over the five years, just slightly ahead of Latin America.

  • Among operators, Petrobras is expected to emerge as the new capacity champion during the period, followed by Saudi Aramco.

The stunning 65% rise in oil prices over the past four months has proven to be a remarkable fertilizer for the medium-term outlook on new production capacity. Projects previously deemed questionable now make economic sense with Brent well over $100 despite the inevitable low-carbon energy transition.

According to Energy Intelligence's assessment, the peak of new capacity additions will occur in 2024-25, after which there will be a steep drop in new oil coming on line, according to current forecasts (see graph). In 2022, US additions are by far the most prolific.

Created with Highcharts 9.0.0'000 b/dPROJECTED GLOBAL OIL CAPACITY ADDITIONS By GroupOpec-PlusNon-Opec-Plus2022202320242025202601000200030004000Upstream Oil Projects Tracker; Source: Company Reports, Energy Intelligence Estimates

Non-Opec-Plus in Lead

Energy Intelligence now sees 12.2 million b/d of additional oil production capacity in 2022-26, up from 10.4 million b/d in our previous quarterly analysis. New capacity additions this year are assessed at 2.6 million b/d, up from 2.4 million b/d previously. The peak of new oil is still in 2024, with nearly 2.9 million b/d coming on line, just slightly over 2025.

For 2026, our current forecast shows new capacity declining to 1.5 million b/d. This, however, is certain to change depending on the price environment and developments in the energy transition.

Of the total new capacity additions, some 68%, or 8.3 million b/d, will be located in countries not aligned with Opec-plus. The remainder, or 3.9 million b/d, will come from Opec-plus members. For each of the five years under review, non-Opec-plus will outpace the alliance in terms of new oil (see graph).

Within Opec-plus, Saudi Arabia will account for just under a third of new oil production capacity in the medium-term, or 1.2 million b/d and the United Arab Emirates 550,000 b/d. However, it is unclear if this capacity will be utilized given Opec’s overriding priority to manage supply.

Russia is set to roll out 800,000 b/d over the five years under review. But there is a question mark hanging over this due to officials sanctions from countries like the US and voluntary sanctions from European buyers.

Assuming Russia does achieve this level of capacity growth, these three heavyweights together comprise two-thirds of the alliance’s new oil (see graph).

The peak of Opec-plus’ new capacity will come in 2024, when 1.2 million b/d is expected to appear thanks to Saudi Arabia’s expansions of the Zuluf, Berri and Marjan fields.

Created with Highcharts 9.0.0'000 b/dPROJECTED OPEC-PLUS OIL CAPACITY ADDITIONSAzerbaijanIranKazakhstanLibyaMexicoNigeriaOmanRussiaSaudi ArabiaIraqKuwaitUAEOther producers20222023202420252026025050075010001250Upstream Oil Projects Additions; Source: Company reports, Energy Intelligence estimates

Created with Highcharts 9.0.0'000 b/dNON-OPEC-PLUS PROJECTED OIL CAPACITY ADDITIONSAfricaAsiaEuropeLatin AmericaNorth AmericaOceaniaMiddle East2022202320242025202605001000150020002500Upstream Oil Projects Tracker; Source: Company reports, Energy Intelligence Estimates

Americas Poised to Shine

Regionally, North America will boast the most new production capacity in 2022-26, our latest estimate shows, or a total 3.5 million b/d. Just below, by a marginal 40,000 b/d, is South America, led by the rising stalwart Brazil.

Interestingly, new capacity additions in North America will peak next year at slightly over 1 million b/d, while South America will see its high point in 2025 when new oil will reach 1.25 million b/d. That is the year Brazil is poised to fire up more floating production vessels in the pre-salt plays.

Together the Americas will account for some 58%, or 7 million b/d, of all new capacity gains over the next five years.

The Middle East, meanwhile, will bring 2.4 million b/d on stream over the same period. That region will see its new capacity peak in 2024.

Created with Highcharts 9.0.0'000 b/dPROJECTED GLOBAL OIL CAPACITY ADDITIONSBy RegionAfricaAsiaEuropeLatin AmericaNorth AmericaOceaniaFSUMiddle East2022202320242025202601000200030004000Upstream Oil Projects Tracker; Source: Company reports, Energy Intelligence estimates
Created with Highcharts 9.0.0'000 b/dPROJECTED GLOBAL OIL CAPACITY ADDITIONS Top 5 OperatorsPetrobrasSaudi AramcoEquinorExxon MobilRosneftOther Operators20222023202420252026050010001500200025003000Excludes US shale; Upstream Oil Projects Tracker; Source: Company reports; Energy Intelligence Estimates

Petrobras Rising

Brazil’s Petrobras is regarded the undisputed leader of new oil capacity in the medium-term. Our assessment indicates that the state-controlled company will usher in nearly 2.1 million b/d of new capacity from now until the end of 2026. The peak will occur in 2025-26 when Buzios 6, 7 and 8 are brought online.

Granted, there are fears that these projects could be postponed due to supply-chain delays. But Petrobras remains steadfast in its drive to boost total capacity to 3.2 million b/d and has approved a $68 billion investment program to accomplish this.

Saudi Aramco, meanwhile, is poised to phase in 1.2 million b/d of new capacity over the five-year period, while Equinor is third in Energy Intelligence’s assessment, with nearly 1 million b/d of oil from new projects in the pipeline. A chunk of Equinor’s new oil will come from Johan Sverdrup Phase 2 scheduled to start in the fourth quarter of this year.

Exxon Mobil and Rosneft are fourth and fifth, respectively, in terms of operators rolling out new production capacity in 2022-26.
Gary Peach, New York