Progressing resources to reserves – why are so many projects stalled?

Westwood’s Progressing Resources to Reserves – Why Were So Many Projects Stalled? report was published in 2020. It reviewed high impact discoveries made between 2008 and 2016 across 30 countries and 39 basins that had neither been sanctioned for development nor undergone appraisal activity since 2016. The study aimed to understand the reasons for these delays and what would be required to unlock the resources.

Key Findings

• Almost half of the 242 recorded high impact discoveries larger than 100 mmboe made between 2008 and 2016 had stalled at the appraisal stage, with 47 bnboe of resources making no progress towards production.
• Of the stalled resources, 5 bnbbl of oil and 103 tcf of gas were contained within 36 discoveries that had been declared commercial but were awaiting a final investment decision. A further 6 bnbbl of oil and 115 tcf of gas were contained within 83 discoveries that were still awaiting a declaration of commerciality and had not been appraised since 2016.
• 80% (38 bnboe) of the stalled resource was located in eight countries, with Mozambique, Brazil and Tanzania accounting for the largest shares. Africa was the region with the greatest volume of stalled resources, containing 28.5 bnboe across 52 stalled high impact discoveries.
• 12 discoveries were estimated to contain more than one billion boe, while 61 had resource estimates between 100 and 200 mmboe.
• 73% of the stalled discoveries were located in deep water, 17% in shallow water and 10% onshore. The less mature the play, the more likely a discovery was to stall, with 74% of discoveries located in frontier and emerging plays.
• Supermajors+ held 19 bnboe of stalled resources in high impact discoveries. Juniors and Independents held 10 bnboe, while Majors held 4 bnboe. The remainder was held by domestic and international NOCs.
• Above-ground issues dominated the reasons projects stalled. The most common cause of delay was the lack of commercial and fiscal frameworks needed to progress gas-rich discoveries in emerging basins.
• Substantial volumes could have been unlocked through improved gas terms and better access to gas markets. Additional resources could also have been unlocked through the application of new technologies and the introduction of new operators with fresh approaches to realise the upside potential of discovered resources.
• To improve exploration efficiency in the future, explorers needed to better understand development cycle times and incorporate this thinking into exploration decision-making.