July 14, 2022

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Upstream Tracker: Non-Opec-Plus Takes Lead on Midterm Capacity Growth

  • Globally, producers will launch an average 2.5 million b/d of new oil capacity per year in 2022-26. Nearly 70% of this will originate in countries not aligned with Opec-plus.
  • The outlook for oil-field projects coming on line in 2026 has improved, and new capacity growth that year is now estimated at 1.9 million b/d.
  • Saudi Arabia is poised to phase in total new capacity of 1.44 million b/d over the five-year period.

The present supply tightness on global markets is shining an optimistic light on upstream developments, and the paper market is pricing Brent for delivery in 2026 in the $75 range — an attractive level for many midterm plays.

Energy Intelligence’s upstream tracker database estimates that new oil capacity globally will average 2.48 million barrels per day in 2022-26, marginally higher than our last analysis.

Importantly, this growth does not factor decline rates at existing fields. Assuming a 2% annual decline rate for current crude oil production of 77 million b/d, then the new capacity will create roughly 1 million b/d net capacity additions annually to meet demand growth over the next five years. Rising output of biofuels and natural gas liquids also help to meet fuel consumption going forward.

Created with Highcharts 9.0.0('000 b/d)PROJECTED GLOBAL OIL CAPACITY ADDITIONSAfricaAsiaEuropeFSULatin AmericaMiddle EastNorth AmericaOceania2022202320242025202601,0002,0003,000Upstream Oil Projects Tracker. Source: Company reports, Energy Intelligence estimates

Nonaligned Producers

Peak capacity additions will occur in 2024-25, when 2.8 million b/d each year is expected to come on line, according to our assessment.

Non-Opec-plus countries will be the drivers of capacity growth. This group of countries, which currently accounts for 42% of global crude output, will add a total 8.6 million b/d over 2022-26, or 1.7 million per year. The peak among these producers will occur in 2025, when 2 million b/d of new capacity is scheduled to start.

The US will roll out 3.3 million b/d of new capacity over the five-year period, or an average 670,000 b/d, while Brazil, which continues to pursue the pre-salt offshore, will phase in 2.5 million b/d.

Newcomer Guyana is now expected to grow capacity by 800,000 b/d, or an average 160,000 b/d, outpacing veteran Norway, which is estimated to lift new oil capacity by 740,000 b/d.

Created with Highcharts 9.0.0('000 b/d)PROJECTED GLOBAL OIL CAPACITY ADDITIONSOpec-PlusNon-Opec-Plus2022202320242025202601,0002,0003,000Upstream Oil Projects Tracker. Source: Company reports, Energy Intelligence estimates2023 Non-Opec-Plus: 1,692

Created with Highcharts 9.0.0('000 b/d)PROJECTED NON-OPEC-PLUS CAPACITY ADDITIONSUnited StatesBrazilGuyanaNorwayQatarCanadaOther Producers2022202320242025202605001,0001,5002,0002,500Upstream Oil Projects Tracker. Source: Company reports, Energy Intelligence estimates

Alliance Capacity

By contrast, Opec-plus is set to bring 3.8 million b/d of new capacity on line over the same period, which comes to 770,000 b/d per year. Lowest annual growth will take place in 2026, when the alliance will boost new capacity by 385,000 b/d.

Globally, however, it is worth nothing that 2026 should usher in more capacity than previously thought. Our most recent assessment indicates that new capacity that year, including Opec-plus and non-Opec-plus, will amount to 1.9 million b/d, which is 24% higher than the last analysis.

The upward revision in the 2026 forecast is partly due to the planned launch of the Jafurah field, an unconventional gas play, in Saudi Arabia. The field is expected to yield approximately 100,000 b/d of condensates in 2026, a year after its anticipated start-up, before reaching 630,000 b/d by 2030.

Saudi Arabia boasts three of the largest fields that are expected to come on stream in the next five years — Zuluf, Marjan and Berri — which are all expansion projects.

Created with Highcharts 9.0.0('000 b/d)PROJECTED OIL CAPACITY ADDITIONSTop ProjectsSaudi Arabia - Zuluf expansion projectRussia - Vostok Oil Project ExpansionSaudi Arabia - Marjan expansion projectKazakhstan - Tengiz Expansion (Future Growth Project)Guyana - YellowtailSaudi Arabia - Berri expansion projectBrazil - Buzios 62022202320242025202602505007501,000*Excludes US shale. Source: Company reports, Energy Intelligence estimates

The United Arab Emirates, meanwhile, is only expected to bring some 70,000 b/d on line during the five years. An in-depth analysis by Energy Intelligence, which included interviews with officials in Abu Dhabi, revealed that much of the Upper Zakum capacity that had been expected in upcoming years was already available in 2021. In addition, the Nasr and Umm Shaif fields are also believed to have reached capacity already and as of this report have no concrete plans for further development.

Iraq, Opec’s second-largest producer, should boost capacity by a total 220,000 b/d over the five years, which is unlikely to be sufficient to cover natural declines. Kuwait will boost capacity by 70,000 b/d, or 14,000 b/d per year, also a lackluster gain when compared to natural declines.

Created with Highcharts 9.0.0('000 b/d)OIL CAPACITY ADDITIONSIraqKuwaitSaudi ArabiaUAE2022202320242025202602004006008001,000Upstream Oil Projects Tracker. Source: Company reports, Energy Intelligence estimates

Gary Peach, New York