Global Oil & Gas Decline Rates Worsen, Threatening Supply

Global oil and gas decline rates are accelerating, raising significant concerns about long-term energy security. The International Energy Agency (IEA) warns that production from mature oil and gas fields is declining at a faster rate, necessitating urgent reinvestment to maintain global supply.

According to the IEA, conventional oil fields are now declining at an average rate of 5.6% per year, while natural gas fields are dropping by 6.8% annually. These numbers reflect a troubling trend—roughly 80% of oil and 90% of natural gas output now comes from fields that have already peaked.

If these global oil and gas decline rates persist without sufficient reinvestment, the IEA estimates the world could lose oil output equal to the combined production of Brazil and Norway every year. For natural gas, that decline would mean losing about 270 billion cubic meters annually—roughly 60% of Europe’s total consumption.

To maintain current production levels, energy companies are already spending over $500 billion annually, primarily to offset the natural decline. Nearly 90% of upstream investment today is dedicated to replacing lost output from aging fields, not expanding capacity or exploring new reserves.

The sharpest declines are seen in offshore and shale fields, which decline more rapidly than large onshore fields in the Middle East. Offshore European fields, for instance, often experience a production drop of over 15% per year, while some Middle Eastern supergiant fields decline at a rate of less than 2%.

Strategic Outlook

• Without renewed investment, markets face increased price volatility and potential shortages.
• Policy adjustments are necessary to expedite approval processes and encourage investment in advanced oil recovery and gas technologies.
• Energy transition goals could suffer if declining supply leads to a resurgence in coal or other high-emission fuels.
• Governments and companies must strike a balance between investing in renewables and efforts to stabilize fossil fuel production during the transition to a low-carbon economy.

The worsening global decline rates in oil and gas signal an urgent need for action. Failure to respond could result in severe disruptions to international energy markets.