The International Energy Agency (IEA) is warning that the world’s oil and gas production is slipping faster than before, and without steady investment, global supply could tumble by the equivalent of Brazil and Norway’s combined output every single year.
According to the new IEA report, The Implications of Oil and Gas Field Decline Rates, production data from more than 15,000 oil and gas fields worldwide shows that existing wells are drying up at a much quicker pace. This is largely because of the industry’s heavier reliance on shale and deep offshore resources, which deplete faster than older, traditional fields.
IEA Executive Director Fatih Birol stressed that nearly 90% of all upstream investment today is not about boosting demand but simply about replacing lost supply. “Decline rates are the elephant in the room,” he said, warning that the industry now has to “run much faster just to stand still.”
The report found that the average annual decline rate for onshore supergiant fields in the Middle East is under 2%, but offshore fields in Europe are dropping by more than 15% per year. Shale oil is even more dramatic; production can fall 35% in the first year alone without reinvestment.
The global scale of this problem is massive. In 2010, halting new investment would have cut supply by under 4 million barrels per day (mb/d). Today, that figure is 5.5 mb/d. For natural gas, losses have climbed from 180 billion cubic metres (bcm) a year to 270 bcm.
The IEA projects that by 2050, even with ongoing investment, more than 45 mb/d of oil and nearly 2,000 bcm of gas from new conventional fields would be needed just to hold production steady. That is equal to adding the full combined output of the world’s three largest producers.
Adding to the challenge, the report notes it takes almost 20 years on average for a discovery to move from licence to production.
For Guyana, this analysis helps explain why its oil remains such a hot commodity. The country’s offshore Stabroek Block produces light, sweet crude that is both high in value and cheaper to refine compared to heavier crudes. With global supply under pressure, oil of this quality commands strong investor interest.
Guyana is already producing over 600,000 barrels per day and is expected to more than double that by 2027. While that volume may not be enough to offset global declines on its own, it positions Guyana as one of the most critical new suppliers in the world.
In a market where the industry has to “run much faster just to stand still,” Guyana’s oil gives investors confidence that they are backing one of the few countries still on a sharp growth curve.
