In a stark warning that echoes growing concerns across the global energy sector, Russia’s top OPEC+ negotiator, Alexander Novak, has highlighted the imminent risk of an oil shortage driven by chronic underinvestment.
Speaking recently, Novak emphasized that traditional accessible reserves are depleting rapidly, while hard-to-recover reserves demand significantly higher costs. “We are now seeing traditional accessible reserves being depleted, while hard-to-recover reserves require significantly higher costs. Therefore, if investment in the oil industry is not renewed in the near future, consumption will outpace supply and we will face a market imbalance,” he stated. This sentiment aligns with broader industry alarms about the consequences of a decade-long shortfall in exploration funding, setting the stage for potential supply disruptions amid steadily rising demand.
The Ticking Clock of Declining Oil Fields
Global oil production is inherently challenged by natural decline rates in existing fields, a problem exacerbated by insufficient investment over the past decade.
According to the International Energy Agency (IEA), without new capital injections, global oil output would plummet by about 8% annually, with natural gas following at 9%.
These rates vary by field type: onshore supergiant fields in regions like the Middle East decline at less than 2% per year, while deep offshore fields erode at a staggering 10.3%.
Since 2019, nearly 90% of the world’s oil and gas production has come from fields in decline, relying heavily on shale and deepwater resources that deplete even faster.
ExxonMobil’s outlook paints an even grimmer picture, estimating that oil production declines at around 15% per year absent new investments.
Unconventional shale fields can see initial drops of 15-40%, while conventional ones average 3-7% annually.
The underinvestment trend, fueled by volatile prices, energy transition pressures, and regulatory hurdles, has left a void in new discoveries. As a result, the industry now faces a “hidden crisis” where existing fields are being drained without adequate replenishment through exploration, potentially leading to a structural supply gap.
Long-Term Oil Demand: No Peak in Sight
Contrary to earlier predictions of a swift peak in fossil fuel demand, recent analyses suggest oil consumption will continue to grow well into the future. The IEA, once a proponent of demand peaking before 2030, now anticipates oil use rising until at least 2050, potentially reaching 113 million barrels per day (mb/d)—a 13% increase from 2024 levels.
This revision reflects resilient global demand, particularly in emerging markets. For instance, India’s oil needs are projected to expand by 4-5% annually through 2030, driven by economic growth.
OPEC shares this optimism, forecasting demand growth of 1.3 million bpd in 2025 and 1.4 million bpd in 2026.
Even in mature markets like the U.S., production is booming to meet demand, with output expected to average 13.53 mb/d in 2025.
These projections underscore that the “myth of peak fossil-fuel demand” is unraveling, with global needs hovering around 100 mb/d in the near term and showing no signs of abating without alternative energy sources scaling up dramatically.
The UK’s North Sea: A Cautionary Tale of Energy Insecurity
The United Kingdom provides a vivid example of how policy-driven declines in domestic production can erode energy security. North Sea oil output is falling faster than anticipated, with no new field developments approved in 2025—the first such year since the 1960s.
Of the 283 active fields, around 180 are expected to cease production by 2030, accelerating the basin’s long-term decline.
This has been compounded by decisions like the shutdown of major facilities by operators such as CNR, where costs have outstripped revenues.
As a result, the UK now imports a record 40% of its energy, with policy choices—rather than geological limits—driving this shift.
Net import dependence has risen sharply, including 33,000 GWh of electricity in 2023 alone.
While renewables are expanding, they are not creating jobs fast enough to offset losses from the oil and gas sector, raising concerns about economic fallout and higher costs for consumers.
Critics argue that further restrictions, such as reforms to the Energy Profits Levy, could lead to 1,000 job losses per month and even greater reliance on volatile imports.
This dependency exposes the UK to global price shocks and geopolitical risks, highlighting that energy security truly starts at home. Diversifying supply and reducing imports are key, but as the IEA notes, new oil and gas discoveries would only marginally slow the decline—emphasizing the need for balanced policies that include sustained domestic drilling.
Time to Drill More: Securing the Future
Novak’s comments serve as a wake-up call: the world cannot afford to ignore the supply side of the energy equation. With demand poised for long-term growth and existing fields in steep decline, renewed investment in exploration and production is essential to avert shortages. Nations like the UK illustrate the perils of over-reliance on imports, where energy independence erodes amid policy shifts. To ensure stability, governments and industries must prioritize drilling more at home, fostering innovation in hard-to-recover reserves while bridging the gap to a sustainable future. Energy security demands action now—before the imbalance becomes a crisis.
California has followed the UK, and we are watching them become a net energy importer, while killing the once great oil-producing Kern County. They have passed legislation to allow 2,000 new drilling permits, but so many companies and employees with the skills to drill for oil and gas have left the state. We will be watching to see if the Adminstration in California controlled by Gavin will slow walk the permits as we expect. A slow walk-in permit is an expected methodology in California government to follow the law, while imposing its will to end oil production.
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