Oil and gas companies drastically reduced their search for new fossil fuel resources last year, says the report

LONDON – Leading oil and gas companies have dramatically slowed their search for new fossil fuel resources in the past year, the data show, as lower energy prices due to the coronavirus crisis have caused spending cuts.

Acquisitions of new onshore and offshore exploration licenses for the five largest Western energy giants have dropped to the lowest level in at least five years, data from Oslo’s Rystad Energy consultancy showed.

The number of exploration licensing rounds fell last year due to the epidemic, while companies like Exxon Mobil, Royal Dutch Shell and Total de France also cut spending, said Rystad Energy analyst Palzor Shenga.

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“Acquiring additional leases comes at a cost and requires that certain work commitments be met. Therefore, companies would not like to accumulate additional areas in their non-essential areas of operations, ”said Shenga.

Of the five companies, BP saw by far the biggest drop in the acquisition of new areas in 2020. Bernard Looney, who became BP’s CEO in February, outlined a strategy to reduce oil production by 40% or 1 million barrels per until 2030. BP has rapidly reduced its exploration team in recent months.

Exxon, the largest energy company in the United States, acquired in 2020 the largest acreage of the group, with 63% in three blocks in Angola, according to Rystad Energy.

Total came in second with two large blocks acquired in Angola and Oman.

The acquisition of exploration areas means that companies can search for oil and gas. If new resources are discovered in sufficient volumes, companies need to decide whether to develop them, an expensive process that can take years.

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As a result, the drop in exploration activity could lead to a supply gap in the second half of the decade, analysts said.