A total of 21 crude oil and natural gas projects are expected to start operations in three countries in north-west Europe next year. Of these, the UK will lead with a total of 12 projects mainly located in North Sea shallow water, according to GlobalData.
GlobalData’s latest report, ‘2019 Northwest Europe Upstream Development Outlook – Surge in New-Build Oil and Gas Project Starts for 2020’, reveals that an increase in project starts can be expected for 2020 to the highest level in the region since 2017, driven mainly by shallow water subsea developments.
Across the region, a higher number of oil-focused developments are due to start-up, while the UK is set for a deepwater return as no deepwater projects came online in 2018 or 2019, meaning a resurgence to levels last seen in 2017.
Daniel Rogers, upstream oil & gas analyst at GlobalData, said: “Oil focused developments are set to see a higher proportion of invested capital over the period. This likely reflects the development of upcoming major oil projects and a currently more stabilized oil price environment; whereas gas focused developments are lacking due in part to weak domestic gas prices as well as gas infrastructure constraints in certain basins.”
The company’s research also reveals that the outlook for natural gas output across the region looks bleak, and forecasts a decline by approximately 25% from current levels over the next five years as upcoming projects struggle to offset overall declines. The lack of major upcoming gas projects, alongside a production phase out at the giant Groningen gas field, has set a clear downward trend for gas production in north-west Europe.
Despite rising gas production for Norway and the UK over the near term, declines in the Netherlands, Denmark and Ireland outpace volumes introduced from upcoming projects.
Rogers adds: “In 2019, oil production in north-west Europe rose from 2018 levels but gas volumes declined comparatively. Looking forward, north-west Europe’s oil production is set to rise potentially out to 2023 as major fields ramp up and Johan Castberg production commences.
“For gas, the outlook is less optimistic as the number of large gas projects coming on-stream is limited and post 2021 could see dramatic declines in gas production without the addition of future projects.”