The International Energy Agency (IEA) has issued a critical report warning of accelerated decline rates in global oil and gas fields, underscoring the urgent need for sustained investment to secure future energy supplies.
The report, titled The Implications of Oil and Gas Field Decline Rates, draws on extensive data from about 15,000 oil and gas fields worldwide.
According to the IEA’s analysis, the pace of production decline is intensifying due to increased reliance on shale and deep offshore resources.
This trend presents significant challenges in maintaining current production levels.
The agency highlights that to offset these supply losses, nearly 90 per cent of upstream investment each year is necessary just to sustain existing output.
Fatih Birol, IEA executive director, emphasised the gravity of the situation, stating: “Decline rates are the elephant in the room for any discussion of investment needs in oil and gas.”
The report reveals wide variations in decline rates depending on the type of field and region.
Onshore supergiant oil fields in the Middle East exhibit relatively low annual declines of less than 2 per cent, while smaller offshore fields in Europe face declines exceeding 15 per cent per year.
Even more pronounced are tight oil and shale gas fields, where output can fall by more than 35 per cent within the first year without new investment.
The consequences of insufficient investment have grown more severe over time.
In 2010, a cessation of upstream investment would have cut oil supply by just under four million barrels per day (mbbl/d) annually.
Today, that risk has increased to 5.5 mbbl/d. Similarly, natural gas decline rates have surged from 180 billion cubic metres (bcm) per year to 270 bcm annually.
To maintain current production levels, the IEA warns that developing new resources is indispensable.
The report estimates that by 2050, more than 45 mbbl/d of oil and nearly two trillion cubic metres of gas from new conventional fields will be required — an output equivalent to the combined total of the world’s top three producers.
However, the IEA notes that demand reductions could ease this burden somewhat.
The agency also points out the long timelines involved in bringing new oil and gas projects online, typically taking nearly 20 years from exploration licence issuance to first production.
This duration includes roughly a decade for discovery followed by another decade for appraisal, approval, and construction.
The IEA report highlights the critical role of continued investment to counteract accelerating decline rates and ensure long-term energy security amid a shifting global energy landscape.
