Entering into 2019 the global oil and gas industry remains cautiously optimistic as recovering oil prices have boosted companies’ profits and a rebound in European projects from 2018 lows is expected. In Europe, greenfield projects coming online in 2019 are predominantly shallow water developments in the UK and Norway. A lack of deep and ultra-deep water projects seen across Europe for 2019 is a result of the lack of project sanctioning and capital commitment during the period of deflated oil prices. The European hydrocarbon market is set to see a higher volume of oil flow from new projects driven largely by the introduction of Norway’s giant Johan Sverdrup as well as a number of junior exploration and production companies (E&Ps) targeting first oil in the UK.

For projects commencing in 2019 in Europe, the focus will be largely in the shallow water terrain of the North Sea. A fairly even mix of platform and subsea projects will begin production in shallow waters, but with subsea projects outweighing platforms across all terrains.

Number of European projects commencing in 2019 with the associated facility type and average recoverable reserves

Source: Upstream Analytics and  Economics, GlobalData  Oil and Gas                                                                                  © GlobalData

The rise in subsea developments is expected as infrastructure becomes available for tie-back projects and capacity gaps are widened at legacy facilities. For the UK in particular, cross company and government collaborations have helped to improve projects ability to be commercial over recent years. Of all European developments coming on-stream in 2019, 60% are fields that contain less than 50 million barrels of oil equivalent (mmboe) of recoverable reserves. The lack of larger discoveries are expected in mature European basins such as the North Sea, but exploration strategies focusing on near field acreage or asset led campaigns allow smaller discoveries to be monetised with little upfront capital. The trend in Europe for 2019 emphasises that larger fields are necessary for platform developments (over 100mmboe) in the region, whilst subsea shallow water developments remain profitable for fields with recoverable reserves below 50mmboe.

A rebound from 2018 lows in Europe consists of generally smaller resource developments, an abundance of tie backs and an increased proportion of new oil production on-stream. Over the next few years Europe is set to see an uptick in projects coming online but with conservative growth as companies become leaner and more selective.

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