Small, independent oil producers are seeing the potential for growth over the next decade as major energy companies look to invest in renewables. As big companies are being forced to introduce greener policies, independent producers could profit from this change.
Paul Blakeley, chief executive of Jadestone Energy told the Financial Times on Monday., “It won’t be a Shell or BP that will be the last man standing in the oil and gas space… It will be the small independents.”.
This comes in response to the uncertainty surrounding oil, following a drop in demand in 2020. The Covid-19 pandemic has driven major oil producers to invest in new technologies and renewable alternatives sooner than anticipated to keep up with market trends. However, Jadestone Energy, which employs 220 staff and produces 10,000 bpd expects this shift to open-up greater opportunities for small producers. Blakeley hopes to be producing between 50,000 to 75,000 bpd in the next five to ten years.
Despite stocks falling in March this year, alongside the energy industry as a whole, they quickly leveled out and started rising again by April, unlike some major oil competitors. With a market capitalization of $305 million, Jadestone is reassuring its stakeholders of its future by maintaining its low-risk appeal. With the oil demand continuing to increase in Jadestone’s region of focus, the Asia-Pacific – Australia, Vietnam, and New Zealand, the outlook looks bright for this independent.
Although the demand for oil has dropped in 2020, it is likely to pick up rapidly in some parts of the world over the next decade. For example, the Asia Pacific region could see a demand increase of 25 percent by 2040 compared to 2019 according to predictions.
However, this demand could shift away from the world’s top oil importer, China, to the Southeast’s other giant, India. India’s demand is set to increase by as much as 5.8 million barrels per day by 2040, according to a 2018 OPEC report.
Other larger independents have also been making headlines this fall. In October, Pioneer Natural Resources acquired Parsley Energy for $7.6 billion including debt. This makes Texas-based Pioneer the largest independent oil and gas producer in the Permian Basin. Having worked together previously, the merger expects significant savings and greater pressure on regulators in the region. Working in the Permian Basin, the world’s most prolific oilfield with a production of 558,000 bpd equivalent, Pioneer hopes this will ensure it rides out the Covid-19 slump.
Independents, both big and small, are showing the oil industry how they are not only wreathing the storm but expect significant growth and expansion into new markets in the coming decade.
By Felicity Bradstock for Oilprice.com
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