IEA flags supply gap amid insufficient investments

Logo of International Energy Agency (IEA)

The International Energy Agency (IEA) warned of the accelerating decline in global oil and gas field production, noting that the absence of new investments could lead to the loss of supply equivalent to the combined output of Brazil and Norway every year.

In a report published on its official website today, Sept. 16, the IEA stated that nearly 90% of annual spending on exploration and production activities is directed toward offsetting the natural decline in output from existing fields, while only a small portion is allocated to covering any new growth in global energy demand.

The report highlights that decline rates vary significantly, as offshore fields in Europe lose more than 15% of their output annually, while large onshore fields in the Middle East decline by only around 2%.

Shale oil and gas production drops even more sharply, with output falling by over a third in the first year alone without investment, followed by an additional 15%+ decline in the second year.

The data indicates that halting investments in exploration and production would result in a loss of about 5.5 million barrels per day (BPD), roughly equal to the combined production of Brazil and Norway, from the global oil supply each year, up from less than 4 million bpd in 2010.

The agency explained that maintaining current production levels through 2050 will require the development of new projects that would add more than 45 million bpd of oil and nearly 2,000 billion cubic meters of gas, volumes equivalent to the combined output of the world’s top three producers.

Meanwhile, IEA noted that the development cycle for new fields takes around two decades, from the granting of an exploration license to the start of production. This makes early planning and timely investment critical to ensuring market balance and long-term supply security.