Global discoveries of new oil and gas reserves are estimated to have hit a low record in 2017, replacing just 11% of total production. Global capital expenditures remained broadly stable at US$250bn (+2%) in 2017, after having collapsed from US$487bn in 2014 to US$351bn in 2015 and US$245bn in 2016.
Continued low oil prices have discouraged oil producers to invest in new reserves that would take years to develop and could be too risky. A price level of US$80/bbl over two years could justify expensive deep-water projects off the Brazilian or West African coasts. The average new project size has shrunk from 1.1 Gbl of targeted reserves at a cost of US$9bn to 500 mbl projects worth US$3bn.
Global oil prices have started to recover after a year of production cuts by OPEC producers, reaching US$66/bbl at the end of December 2017, up from US$44/bbl in June 2017. Capital investments in new oil projects could then rise by 4.5% in 2018 to US$262bn.