-- The depth and duration of the disruption to global energy supplies by the closure of a single waterway in the Middle East's cluster of oil producing countries has prompted increased interest in resources available elsewhere, Wood Mackenzie said in an opinion article on Monday.
While there were already plans to increase production from various geographies before the Iran war, the conflict has provided additional momentum to bring these forth, according to the article's author, Ed Crooks, Wood Mackenzie Vice Chair for the Americas and Energy Gang podcast host.
Venezuela has been moving faster to raise output, something facilitated by the capture of President Nicolas Madura in January. Legislative reforms have passed in the National Assembly giving clarity of maximum royalties and taxes.
At the same time, state oil company PDVSA lost exclusive control of oil production and sales, the article said, making way for private players to have control of their own projects and access to arbitration.
Foreign oil companies have set out plans to boost the country's output. Chevron (CVX) said it can boost its production in Venezuela by 50% over an 18-24 month timespan and Repsol is aiming for the same increase within 12 months.
Shell (SHEL) is said to be in negotiations with Venezuela's government to develop more gas assets and could take final investment decisions before the end of the year if conditions are right.
Elsewhere, there was record revenue generated by a lease sale of areas in Alaska's National Petroleum reserve, Crooks noted, while in the Gulf of Mexico, which the US government recognizes as Gulf of America, Occidental Petroleum (OXY) said it had made an oil discovery that would extend the working life of its production facilities.
BP (BP) last month said it received approval from the US Bureau of Ocean Energy Management to develop its $5 billion Kaskida project.
Claudia Sheinbaum, Mexico's president, said she was in favor of increasing natural gas production through development of unconventional resources to reduce dependence on the US which provides about 75% of Mexico's gas. It now targets output of 3.2 billion cubic feet per day from unconventional sources by 2035.
Given the lead times involved in establishing more projects, companies need relative certainty of future commodities prices and change in output to decide on whether investing is viable.
There is no sign of any general uptick in US energy industry activity at present with no increase in the number of drilling rigs operating in the US around mid-April, the article said.
Venezuela has been able to achieve an increase as a result of easing of US sanctions, with output rising to 1.1 million barrels a day in March from 900,000 in January. But resources like those in Alaska or the Gulf of America will need years to reach the market.
Venezuela may have some capacity to boost LNG supply if its gas can be piped to Trinidad to supply the Atlantic LNG liquefaction plant there.
Meanwhile Eni (E) and Repsol have reached a deal with Venezuela's government through which they will export gas from the Perla field using a floating LNG vessel. There is also an opportunity for gas to be piped to Colombia, which would free up the LNG it otherwise uses.