Iraqi Kurdistan All in the Timing

Regional Update
Markets Behaving
Differently
The Middle East – one of the most stable E&P markets
The Middle East is the largest producing area within the E&P
industry, with a total production of around 41 MMboepd in 2015,
while Western Europe is the largest offshore market in terms of
spending. These markets are expected to behave differently during
the current downwards cycle.
Billion USD
100
90
80
70
60
50
40
30
20
10
0
Middle East
Western Europe
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Upstream investments (excluding exploration) for Middle East and Western Europe.
The Middle East is the largest producing region in terms
of liquids and the third largest in terms of gas, where current
production is 28.6 MMbpd and 55 Bcfpd, respectively. Liquid
production is expected to grow by 0.8 MMbopd in 2015. This
production growth is mainly derived from the redevelopment of
old fields in Iraq and the growth of mature fields in Saudi Arabia.
Until 2020 the Middle East is expected to continue to grow at an
average pace of around 0.5 MMbopd per year, with Iran as another
key driver. The lifting of sanctions against Iran will probably result
in the return of international oil companies, where the focus
will be on redeveloping mature, oil-producing fields. In terms of
investments, the Middle East has been relatively resistant to lower
oil prices. Total investments in 2015 are expected to be down by
13% compared to 2014, compared to a global average of 23%. One
interesting observation is that despite the drop in oil prices Saudi
Arabia’s rig count is up 25% in 2015 when compared to 2014.
Different Reactions
Western Europe cannot compete with the Middle East when it comes
to production. The region is expected to produce 3.6 MMbpd of
liquids and 23 Bcfpd of gas in 2015. For 2015, the liquid production
is estimated to increase by 150 Mbpd, but for the rest of the decade
it is believed that production will be flat. On the activity side, total
investments will fall by around 30%. There are several reasons for this
decline, but some key explanations include completion of development
projects, lower unit prices and fewer maintenance investments.
The development and reaction of the Middle East and Western
Europe to low prices are quite different. Middle Eastern activity
levels have been robust and production is projected to increase,
whilst in Western European production is expected to remain
flat going forward. One of the key reasons for the resilience of the
Middle East, even in a low oil price environment, is the number of
large mature fields with high potential at a relatively low cost.
Espen Erlingsen, Rystad Energy
Rystad Energy UCube
Norwegian-Greenland Sea starts opening
Central Atlantic starts opening
South Atlantic starts opening
Gulf of Mexico rifting
North Sea rifting
Caledonia orogeny Laramide orogeny
FORMATION OF PANGAEA
The Great Unconformity
Alpine orogeny
Pangaea breakup
Variscan orogeny
Phanerozoic
Paleozoic
Mesozoic
Cenozoic
Precambrian
Neoproterozoic
Paleogene Neogene
Quaternary
Tertiary
Cretaceous
Jurassic
Triassic
Permian
Carboniferous
Devonian
Silurian
Ordovician
Cambrian
2.6
23
66*
145
201*
252*
299
359*
419
443*
486
541
*The Big Five Extinction Events
8 GEOExPro November 2015