Top Projects 2023: Back to growth

"Top Projects 2023: Back to growth"

"Goldman Sachs Research’s 20th edition of its annual review of top assets in global oil and gas production signals a turning point in the oil &amp; gas capex cycle, as higher returns and a renewed sense of urgency around security of supply bring the industry back to growth. The analysts highlight five key themes of change:\r\n<ol>\r\n<li>Investment growth: they expect oil &amp; gas activity to compound at +9% pa growth by 2025.</li>\r\n<li>Production growth:&nbsp;despite higher investment, production growth remains elusive. The analysts expect non-OPEC ex-shale to remain broadly flat in the coming years and shale to slow down and peak by 2026-27.</li>\r\n<li>Profitability:&nbsp;consolidation and higher hurdle rates continue to support strong profitability, with IRR &gt;15% in LNG and &gt;20% in oil for this year’s new projects.</li>\r\n<li>Shrinking reserves:&nbsp;oil reserve life keeps shrinking to 23 years, a 56% reduction over the past decade, as exploration disappoints and focus shifts to short-cycle, short-life developments.</li>\r\n<li>Steepening cost curve:&nbsp;the Top Projects cost curve has become smaller and steeper, with incentive pricing for oil at $80/bl and LNG at $11/mcf.</li>\r\n</ol>\r\n"

Goldman Sachs Research’s 20th edition of its annual review of top assets in global oil and gas production signals a turning point in the oil &amp; gas capex cycle, as higher returns and a renewed sense of urgency around security of supply bring the industry back to growth. The analysts highlight five key themes of change:
<ol>
<li>Investment growth: they expect oil &amp; gas activity to compound at +9% pa growth by 2025.</li>
<li>Production growth:&nbsp;despite higher investment, production growth remains elusive. The analysts expect non-OPEC ex-shale to remain broadly flat in the coming years and shale to slow down and peak by 2026-27.</li>
<li>Profitability:&nbsp;consolidation and higher hurdle rates continue to support strong profitability, with IRR &gt;15% in LNG and &gt;20% in oil for this year’s new projects.</li>
<li>Shrinking reserves:&nbsp;oil reserve life keeps shrinking to 23 years, a 56% reduction over the past decade, as exploration disappoints and focus shifts to short-cycle, short-life developments.</li>
<li>Steepening cost curve:&nbsp;the Top Projects cost curve has become smaller and steeper, with incentive pricing for oil at $80/bl and LNG at $11/mcf.</li>
</ol>

Top Projects 20203: Back to growth

"Goldman Sachs Research"

Goldman Sachs Research

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