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The coronavirus pandemic has caused unprecedented challenges across all industries in one way or another. For the oil and gas sector, the coronavirus outbreak led to a slowdown in mobility, causing a significant drop in the global oil demand.

Although the energy system operated well this year, global oil and gas discoveries in 2021 are expected to hit the lowest level in 75 years if no significant discoveries are unearthed during the next few days. Of what was unearthed this year, energy companies like Exxon Mobil CorporationXOM, Hess Corporation HES and Sinopec SNP were the prominent names.

ExxonMobil and Hess discovered hydrocarbons at Pinktail in the Stabroek Block, located offshore Guyana. The Pinktail well found 220 feet of net pay at 3.7 miles southeast of Yellowtail-1, which is moving rapidly toward the final investment decision.

Pinktail marks the 20th significant discovery in the Stabroek Block. With the latest discovery, ExxonMobil and Hess have added to their previously estimated 9 billion barrels of oil equivalent of recoverable resource in the block. Both companies also announced the successful appraisal of the Turbot discovery.

In August, Sinopec, currently carrying a Zacks Rank #3 (Hold), discovered an oil and gas field in China’s Xinjiang province. The field is located in the Shunbei area of the famous Tarim Basin. Sinopec is expected to have discovered more than 100 million tons of hydrocarbons in the field.

A significant portion of China’s electricity is generated by coal-fired power plants, which emit greenhouse gases, leading to pollution. To solve the problem, China has rapidly increased natural gas use. Therefore, the Tarim Basin resources are important for Sinopec’s natural gas business as it has immense potential for growth over the coming years.

While some high-ranked prospects are expected to be drilled by 2021-end, even a sizable discovery might be insufficient to contribute toward discovered volumes for 2021, as those wells may not be completed this year. As a result, the aggregate discovered volume for 2021 is approaching to hit its lowest level in decades.

As of November-end, total global discovered volumes were 4.7 billion barrels of oil equivalent (boe). With no major finds announced in December, the oil and gas sector is on course for its worst discovery record since 1946. This would indicate a significant decline from the 12.5 billion boe discovered in 2020.

Per a Norwegian energy intelligence firm, liquids dominate the hydrocarbon mix, constituting 66% of the total discoveries. In November 2021, seven discoveries were made, with about 219 million boe of volumes. Hence, the monthly average of discovered volumes now stands at 424 million boe this year. A reduction in cumulative volume represents the lack of large individual discoveries than in the previous years.

Amid clean energy transitions, underinvestment in the hydrocarbon sector and changing government regulations are expected to have resulted in lower discoveries. Notably, the total investment in the exploration and production of oil and gas declined 23% below the pre-coronavirus levels to $341 billion in 2021, even as oil demand continued to rise globally.

In this context, some experts have sounded the alarm of an impending deficit. Though the worldwide oil demand is expected to plateau by the mid-2030s, the commodity will likely remain major part of the international energy mix until 2045, as the global population will likely increase.

According to OPEC estimates, demand is expected to increase to 108.2 million barrels per day (bpd) in 2045 from 90.6 million bpd in 2020. In other words, if the trend of low discovery levels continues, supply might eventually fall short of demand. This, in turn, could drive prices sky-high.

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