Global upstream update: the global sanctions slump, grappling with gas and potential US tailwinds

In our special annual edition of the Global upstream update, we explore some of the most impactful themes on the industry’s mind during 2024, how they have evolved since and what to look out for in 2025. Investment will remain cautious and why oil and gas companies should prioritise upstream decarbonisation.  

Global: major project sanctions slump 

Despite the potential of 32 major global upstream final investment decisions (FIDs) in 2024, only 20 projects were sanctioned. This was the third consecutive year of FID declines, and the industry’s mood heading into 2025 signals a similarly lacklustre year ahead. 

In 2024, sanctioned capital expenditure was only US$80 billion (less than 10 billion barrel of oil equivalent (BOE)) as operators remained committed to capital discipline and the macro environment became more uncertain. Delays by ADNOC, and political factors in Mozambique and the UK, also extended project timelines.  

Some of those delayed projects may proceed in 2025, but a sharp rebound in the number of projects reaching FID seems unlikely. We delve deeper into Major upstream projects sanctioned by year in the complimentary copy of our report, which you can access by filling in the form above. 

Subsurface: exploration results take a hit in 2024 

Exploration performance in 2024 was marked by a reduced well count and the lowest number of discoveries in a decade. Only a small proportion of the resources discovered were considered commercial or viable. 

At the start of the year, there were expectations of a slight increase in exploration spending, with returns in line with recent years at around 15%. But the reality of just 20 discoveries means the commercial and economic viability was half of previous years. 

As operators progress appraisal and development plans, exploratory activity will increase in 2025, particularly in high impact deepwater plays. Namibia will remain a global exploration hotspot, while exploring for and commercialising gas in the East Mediterranean will also be critical to the year’s performance, but results are already mixed. Commercialising the discovered resources in both regions remains a significant challenge. 

Europe: Cyprus / Türkiye development plans 

Cyprus’s Aphrodite development struggled to gain approval as Chevron’s attempts to revise the plan faced opposition from the government.  

The two parties finally agreed when Chevron submitted a revised development concept which included an floating production unit (FPU) in Cypriot waters – a key component in the government's proposal – and also agreed to demands to increase the number of wells at start up and production capacity to 800 mmcfd. While both parties did reach an agreement, the commitment to develop the field is still uncertain. A FEED study could begin this year, but if Aphrodite is not competitive within Chevron’s global portfolio, the project may not move forward. 

Also making changes to their development concept, is Türkiye’s TPAO to address the slow ramp-up at its flagship Sakarya gas field. Despite additional wells, the field’s initial output has been lower than anticipated by both the operator and the government. 

With the expected uptick in production not materialising in 2024, TPAO has gone back to the drawing board to revise the development plan. The NOC has purchased the floating production storage and offloading (FPSO) BW Opportunity with plans to deploy it in the field and will also install a new-build FPU.  

TPAO is expected to award contracts for phase 2B this year which will include FPU construction and installation. Although this will increase the overall development costs, it will also provide crucial additional processing capacity, allowing Türkiye to secure the volumes needed for its domestic market. 

Decarbonisation: how should operators prioritise? 

While the industry has historically focused primarily on reducing emissions intensity, to make the biggest impacts, operators should focus on opportunities with the greatest decarbonisation potential and the most financial incentive. 

This means prioritising high-value assets with significant absolute emissions and a strong cash flow, such as LNG plants, oil sands projects, and large onshore fields with flaring issues. These all rank high in Woodmac’s Decarbonisation Potential Index which benchmarks opportunities, compares progress and helps companies analyse portfolios.  

Currently, two-thirds of global production score above average for both decarbonisation potential and carbon policy risk. To meet carbon budgets, operators must make targeted investments in these key areas to achieve the most significant impact. 

SSA: Nigeria seals the deals  

Nigeria has hit a major milestone as several big deals between international oil majors and African-focused companies are completed. 

The deals in deepwater oil and gas supply were initially delayed as NNPC and the Nigerian government reviewed and negotiated the details.  

Despite deals with Shell and TotalEnergies being slow and contentious, the industry logic and commercial fundamentals made them viable. The five main deals – featuring Shell, TotalEnergies and ExxonMobil – have either been completed or given the green light by the government and are set to finalise by Q1 2025. 

For more on this and other global upstream themes, we invite you to download a complimentary extract from our Global Upstream Update – February 2025.