The International Energy Agency (IEA) has published a study that revealed how the oil and gas deposits lose most of its production capacity in the first years of activity. 90% of new investments in these sources of energy serve to compensate for these losses.
Without investments, the world oil production would fall by 5.5% in a year, while gas by about 6.5%. It is the result of years of searching for complex deposits to be exploited, such as submarine wells or scholarship deposits, which require significant investments to be maintained productive.
The decline of oil and gas production is accelerating
The study of IEA, entitled the implications of the decline rates of the oil and gas deposits, does not only photograph today’s situation. In fact, the data underline that the decline in productivity of fossil fuels deposits is accelerating.
| 2010 | 2025 | |
| Decline in oil production | 4 million barrels per day | 5.5 million barrels per day |
| Decline in gas production | 180 billion cubic meters per year | 270 billion cubic meters per year |
The executive director of IEA, Fatih Birol explained the delicacy of the situation:
In the case of oil, an absence of Upstream investments (on deposits, editor’s note) would remove the equivalent of the combined production of Brazil and Norway from the global market budget. This means that the industry has to run much faster than the year just to stay firm.
Norway is the first European manufacturer with 1.8 million barrels per day, Brazil is the ninth worldwide, with 3.1 million barrels per day.
The situation of the major world producers
The decline affects the different types of deposits in a different way. The traditional ones, the first to be discovered, are less influenced by this phenomenon, while the most recent have very high rates of decreasing productivity:
- Middle Eastern deposits, 2% annual decline;
- European offshore deposits, 15% annual decline;
- Tight Oil deposits, 35% decline the first year, 15% the second;
- Department of scholars (shale gas), 35% of decline the first year, 15% the second.
A situation that benefits traditional manufacturers, which must only cover the costs of the extra depth to continue to keep the productivity of their deposits stable.
How much does it cost to keep the production of oil and gas stable stable
The new extraction methods, through the perforation of the ocean seabed or the crushing of bituminous rocks, are much more expensive and therefore also absorb investments to keep production constant. The result is that 90% of the money that is placed every year in the oil and gas extraction industry simply serves not to decrease the output.
To contribute to counteracting this decline, by 2050 they would be necessary:
- 2,000 billion cubic meters of gas per year from new deposits;
- 45 million cubic meters per day of oil from new wells.
Finding and starting to exploit new deposits is a long and expensive process. IEA’s study highlighted that it takes at least 20 years to move from the release of the first licenses for exploration to production.
The situation of the oil and gas offer is therefore very complex. Not only is it not possible to quickly increase production, but also keep it stable costs a lot. A sudden increase in demand or a distortion in market balances, as happened in 2022, could therefore cause a surge in the prices of energy raw materials and, consequently, of those of fuels and bills.
