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 & 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:

1. Investment growth: they expect oil & gas activity to compound at +9% pa growth by 2025.
2. Production growth: 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.
3. Profitability: consolidation and higher hurdle rates continue to support strong profitability, with IRR >15% in LNG and >20% in oil for this year’s new projects.
4. Shrinking reserves: 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.
5. Steepening cost curve: the Top Projects cost curve has become smaller and steeper, with incentive pricing for oil at $80/bl and LNG at $11/mcf.