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As many as 30 upstream projects larger than 50 million barrels of oil equivalent (boe) could reach a final investment decision (FID) in 2024, an increase from 22 last year, according to a new report from Wood Mackenzie.
Project activity will increase this year, with a total of $125 billion in investment and the potential for 14 boe up for sanction, the consultancy said in its ‘Class of 2024: Benchmarking this year’s upstream FIDs.’
“With many projects delayed or postponed, we expect operators to commit to more projects in 2024 than last year,” said Ross McGavin, principal analyst at Wood Mackenzie.
“National oil companies (NOCs) in the Middle East will control the most projects, but the majors will be busy as well, particularly as they prioritise advantaged deepwater resources,” he added.
As the number of projects rises in the current year, project breakevens are projected to fall, with an associated bounce back in returns (IRRs), which dipped in 2023.
The class of 2024 projects require an average of $47 per barrel to generate a 15 percent IRR, slightly below the class of 2023’s $49 per barrel.
The weighted average IRR for the class of 2024 is 23 percent, helped by a higher liquids weighting of 57 percent in 2024, compared to 2023’s 46 percent and the five-year average of 51 percent, the report said.
(Writing by P Deol; Editing by Anoop Menon)
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