Judy Maksoud
International Editor
This year brings with it the promise of considerable exploration and prod-uction activity. Not surprisingly, invest- ors have targeted West Africa for cont-inued development. The region will see a significant percentage of the world's capital expenditure in the coming years.
The Asia-Pacific region will also see a lot of exploration activity, much of it initiated by state oil companies that have already laid the foundation for a high volume of activity. Australia, New Zealand, Vietnam, Thailand, and Malaysia will continue to look to outside investors, but there are many interested parties with successful track records.
Heavy exploration activity took place in the Mexican Gulf of Mexico last year, and more is in the works for 2004, along with considerable gas development.
Things are also looking up in the US GoM. Interest continues in the ultra-deepwater areas, and the royalty relief recently approved by the Minerals Management Service has brought into focus the potentially great deep gas reserves of the shallow shelf. To the north, new seismic surveys offshore Atlantic Canada point to increased exploration drilling over the next few years.
Meanwhile, enormous LNG projects, some of which will be offshore for the first time, are becoming more prominent on the global scene, with a facility underway in the Adriatic Sea and several more being considered offshore the US.
Brazil has allocated a significant sum to exploration and production work for the coming year, and Trinidad and Tobago's offshore continues to reward practically every company that has invested there.
Western Europe and the UK are still struggling to maintain their current level of activity, but new projects offshore Norway and innovative licensing off the UK could help boost production numbers.
Overall, the world outlook for exploration and production in 2004 is favorable.
The numbers
Economic consultants, Mackay Consult-ants estimate that world offshore oil produc-tion in 2003 equaled 26.1 MMb/d, making up 34.1% of total world oil production. Offshore gas production last year totaled 685.6 bcm, accounting for 25.8% of the world's total. Estimates from the International Energy Ag-ency suggest that gas production increased by about 5% last year.
According to Mackay, oil production rose 11% last year over the previous year offshore the Middle East, 7.3% off North and Central America, and 6.8% off South America. Iran led the world as the nation with the greatest percentage increase in offshore production with 47.8%. China saw a 24.2% increase in production over the previous year, and Canada grew by 14.4%. Not surprisingly, oil production dropped offshore Western Europe and in the North Sea.
The Middle East led the world in the greatest growth in offshore gas production as well, with a 23.9% increase over 2002. The Medit-erranean and Black Seas saw 13.5% growth. The Asia-Pacific region had 10.6% growth. Iran had the greatest growth in offshore gas production at 99.3% over 2002.
State-controlled entities
Most of the national oil companies are spending their money at home.
India will spend billions over the next few years on a deepwater exploration program. Pemex is spending heavily on domestic exploration drilling and gas development. And Petrobras has allocated $22.4 billion for E&P over the next four years offshore with the hope of becoming a net exporter of oil by 2007.
CNOOC's 2004 capital budget will be approximately double that of 2003 estimated expenditure, reaching $270-290 million.
Development capital expenditure for 2004 is budgeted at $1.6-1.7 billion. Thirteen development projects are expected to come on-stream between 2004 and 2005, of which six are expected to be completed in 2004, the most ever planned for completion in a given year in the company's history. The vast majority of this activity will be domestic, though the company continues to look for growth opportunities worldwide.
Natural gas production and sales, as the new growth engine for CNOOC, will continue to be one of the company's core business priorities.
Looking ahead
Though the UK and Western Europe will not see significant growth, few other areas of the world are facing plateau production in the near future. Most of the world will see increased exploration, especially where recent success has created positive expectations. West Africa will see continued exploration and considerable development. Southeast Asia will see much of the same. The Mediterranean and Caspian seas have enormous growth potential, and some of that will be tested in the coming year.
High oil and gas prices are a sign of good things to come. This year promises to be one of great opportunity.
