The drastic fall of prices triggered by the coronavirus pandemic has caused top oil and gas companies to sharply slow their search for new fossil fuel resources last year.
According to Oslo-based consultancy Rystad Energy, acquisitions of new onshore and offshore exploration licenses for the top five Western energy giants dropped to the lowest in at least five years.
Licensing rounds for new oil and gas exploration dropped last year due to the epidemic while companies including Exxon Mobil, Royal Dutch Shell and France’s Total also reduced spending.
Companies would not want to pile up on additional acreages in their non-core areas of operations with additional leases that come with a cost.
British Petroleum saw by far the largest drop in new acreage acquisition in 2020. BP CEO Bernard Looney promised to slash oil output by 40 percent or production by at least 1 million barrels per day by 2030. BP has made significant cuts to its oil exploration team in recent months.
Exxon acquired the largest acreage in 2020 in the group, with 63% in three blocks in Angola, according to Rystad Energy.
Companies can search for oil and gas by bidding for exploration permits. The drop in exploration activity could lead to a supply gap in the second half of the decade.