The number of upstream projects sanctioned globally is on course to double this year as the sector’s recovery continues, an energy consultancy has said.
Wood Mackenzie (Woodmac) said 25 final investment decisions (FIDs) could be made by the end of 2017, compared to just 12 last year.
Fifteen projects capable of yielding 8billion barrels of oil were sanctioned in the first half of 2017, mostly in brownfield projects.
Last year’s 12 FIDs were expected to contribute 8.8billion barrels.
Angus Rodger, research director for Asia-Pacific upstream at Woodmac, said: “These are positive signs that the upstream industry is continuing on the road to recovery and that the more competitive conventional projects are moving down the cost curve sufficiently to attract new investment.
“Eleven of the 15 project sanctions year-to-date are either brownfield expansions on existing fields, satellite developments or subsea tiebacks.
“Not only are these projects less risky than greenfield developments, they also tend to be less capital-intensive and are quicker to bring onstream, offering a quicker payback and better returns on development dollars.
“This is reflected in lower development capex per barrel and stronger project returns.”
Woodmac also said oil majors were leading the way on new project sanctions.
Eight of the 15 projects approved so far this year are operated by majors.
And of the 35 mid-to-large projects sanctioned since the start of 2015, a total of 19 were major-operated.
Meanwhile, national oil companies have been inactive on new project investments over the last two-and-a-half years.
Woodmac said they needed to look out for investment opportunities or they would face significant production declines post-2020.
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