Oil & Gas

Discussions about the future of oil and gas often emphasize demand, but the International Energy Agency (IEA) stresses that supply dynamics, particularly field decline rates, are becoming increasingly critical. In its recent report, The Implications of Oil and Gas Field Decline Rates, the IEA highlights that understanding how production from existing fields naturally declines is essential for maintaining market stability and guiding investment decisions. Since 2019, nearly 90% of upstream investment has been focused on offsetting these declines rather than expanding production, with global investment expected to reach around USD 570 billion in 2025.

The report reveals significant shifts in global production sources. Conventional oil fields, which made up 97% of output in 2000, now contribute only 77%, while unconventional sources like tight oil and shale gas have surged. Despite this rise, a handful of supergiant fields in the Middle East, Eurasia, and North America continue to produce almost half of the world’s oil and gas. Decline rates vary widely: supergiant oil fields decline at just 2.7% annually, whereas small fields can see declines exceeding 11.6%. Offshore fields experience faster declines compared to onshore, with regional differences also notable — the Middle East has the lowest decline rates, while Europe’s offshore-dominated fields show the steepest drops.

Without sustained investment, production declines would accelerate dramatically. The IEA warns that global oil production could decrease by 8% per year—equivalent to losing about 5.5 million barrels per day—while gas could fall by 9% annually, roughly equal to Africa’s total output. Unconventional sources are particularly vulnerable; for instance, tight oil and U.S. shale gas would see a 35% drop in production in the first year if investment halted. To maintain current production levels, the IEA projects that by 2050 over 45 million barrels per day of oil and 2,000 billion cubic meters of natural gas will be needed from new conventional fields.

Developing new conventional projects is a lengthy and complex process, often taking nearly 20 years from discovery to production. Most recent projects are expansions of existing fields, with more than 70% of approvals occurring offshore. The IEA concludes that rising decline rates combined with challenging operating environments make a deep understanding of field decline critical for accurate energy modelling and market resilience. Ultimately, future global supply—and the ability to meet both demand and climate goals—will depend on effective investment, sound economic policies, and supportive regulations.