ExxonMobil, Chevron, and other energy companies are accelerating their search for new oil and gas exploration areas—far from the risks associated with Middle East conflicts. ExxonMobil recently revealed a potential plan to invest up to $24 billion in deepwater oil fields in Nigeria, while Chevron has expanded its operations in Venezuela. BP has acquired oil and gas rights in offshore blocks in Namibia, and TotalEnergies signed an exploration agreement with Turkey. Energy research consultancy Wood Mackenzie projected on Thursday that major oil firms could collectively generate $120 billion in value from exploration activities over the coming years.
Attacks by Iran on energy facilities, coupled with shipping disruptions in the Persian Gulf, have triggered a global scramble for oil, costing some Western oil companies billions of dollars in lost revenue. However, surging energy prices have generated massive cash inflows for the oil sector, which are expected to help companies venture into regions previously deemed too difficult or abandoned years ago. Many drilling firms had previously cut exploration spending to return more capital to shareholders.
"Never underestimate the enthusiasm of upstream professionals for opportunity. They’ll say, 'Man, if only we could pull this or that off,'" remarked a nonresident senior fellow at the Center for Strategic and International Studies and former Chevron executive. "Now, they have the money to do it."
In calls on Thursday with executives from Exxon, Chevron, and other oil firms, the U.S. Secretary of Energy and the Secretary of the Interior urged continued increases in oil production to address looming supply shortfalls and curb skyrocketing prices.
U.S. crude futures are currently trading around $88 per barrel, up from pre-conflict levels in the $60s. Oil prices fell sharply on Friday after the U.S. President and Iranian officials announced the reopening of the Strait of Hormuz. Iran later stated the strait had been closed again.
According to informed sources, oil companies aim to maximize output while prices are high but will do so within existing budgets, avoiding extra costs for large-scale investments.
Wood Mackenzie data show that from 2021 to 2025, global major oil companies are expected to spend roughly $19 billion annually on exploration combined.
Industry executives are also looking further ahead: securing sufficient oil and gas resources to ensure profitability into the 2030s. The closure of the Strait of Hormuz—a critical chokepoint for oil and gas transit between Iran and the UAE—has disrupted about 20% of global daily oil and liquefied natural gas shipments.
Some Western oil companies operating in the Middle East have been hit hard. Exxon reported a 6% drop in global oil and gas production in the first quarter due to the conflict. Damage to its gas facilities in Qatar is expected to result in roughly $5 billion in annual lost revenue. Partner Qatar Energy estimates repairs could take up to five years.
The oil and gas industry is now expected to shift its focus away from the Persian Gulf. Just days before the conflict erupted, Chevron announced exclusive talks with Basra Oil Company to acquire a stake in West Qurna 2 in Iraq—one of the world’s largest onshore oil fields. But analysts believe Western oil firms are unlikely to sign any major deals in the Middle East until the conflict is fully resolved.
Instead, the economic fallout from the conflict is pushing these firms to diversify their portfolios and spread supply disruption risks globally. Energy companies are also striving to boost their reserves. According to Wood Mackenzie, global oil producers need to find enough new resources to add 300 billion barrels to total reserves to meet global demand through 2050.
ExxonMobil, Chevron, Shell, BP, and TotalEnergies are closely watching new exploration blocks in Africa, South America, and the Eastern Mediterranean, which could replenish their oil and gas reserves for the coming decade.
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