Energy Analytics

International Upstream Returns Still Competitive


Long-lead international upstream projects still offer returns that remain competitive with North American oil plays and the fast-growing renewable energy sector despite growing economic, investor and regulatory headwinds. As a result, long-term production declines from the international project slate will continue to be offset by world-class projects such as the Guyana/Suriname developments that offer strong economics and production growth.

International offshore project IRRs have come into question in recent years as major new development projects have thinned. The push for greater portfolio diversification among operators raised the bar for new investments in long-cycle hydrocarbons projects. While it’s impossible to establish with full certainty just how resilient and investable the global oil and gas space is, understanding the returns from long-cycle projects gives a strong steer.

Amid a broad industry expectation that the days of long-cycle oil and gas projects and, by association, international supply are numbered, this is not the case, in our view. Taking into account full-cycle returns, resource scale and asset performance, we assess that hydrocarbon projects in this sector still offer competitive double-digit returns, particularly for oil and gas tiebacks compared to standalone projects (Figure 1).

Renewable energy returns are also relevant to this discussion as international oil companies allocate increased capital to onshore and offshore wind projects. When compared side-by-side in a $50 Brent world, international hydrocarbon projects IRRs are competitive with those of offshore and onshore wind projects, supporting our view that offshore oil and gas will retain its place in operators’ portfolios.

Unlike oil and gas projects, renewable investments help companies reduce their emissions profile, offer stable cash flow through power purchase agreements, access to lower cost of capital and boost corporate green credentials. But renewables also face their own headwinds despite strong IRRs: the lack of land availability and distance to population centers often challenge onshore wind projects.

FIGURE 1 | IRR of Supermajor Offshore Project Slate

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Picture of Enverus


Energy’s most trusted SaaS platform — creating intelligent connections that uncover insights and opportunities to deliver extraordinary outcomes.

Subscribe to the Enverus Blog

A weekly update on the latest “no-fluff” insight and analysis of the energy industry.

Related Content

Energy Transition
ByCarson Kearl

This past week two companies in the advanced reactor space went public. Oklo Inc. (NYSE: OKLO) and Nano Nuclear (NASDAQ: NNE) had mixed opening days, with OKLO seeing nearly a 50% price drop from open and NNE trading up well...

Enverus Press Release - Tapping Alberta’s overlooked lithium brines
Energy Transition Intelligence
ByMatthew Keillor, Editor, Enverus Intelligence

Equinor is acquiring 45% stakes in two of Standard Lithium’s direct lithium extraction (DLE) projects in the Smackover Formation in Southwest Arkansas and East Texas, less than a month after closing the book on its U.S. onshore shale operatorship.

Enverus Press Release: Beyond the horizon: US solar and storage solutions are on the rise
Power and Renewables
ByMarie Amice

Learn how Enverus Contiguous Acreage enhancement simplifies parcel discovery, making negotiations easier and projects more viable.

Power and Renewables
ByColton Wright

Harnessing Sunlight and Soil As the early morning light filters through the countryside, you find yourself on a quiet rural road. You’re sipping coffee and humming your favorite tune. You’re on your way to see loved ones, explore a national...

Power and Renewables
ByBryan DiRenzo

In the United States, the anticipated load growth and the retirement of aging plants to meet state mandates are creating a compelling narrative for the expansion of battery storage infrastructure.

Enverus Press Release - Load impact imminent: Data center growth at the mercy of power supply constraints
Energy Transition
ByJeffery Jen

On March 25, 2024, the EPA released its final rulemaking on the update to 40 CFR Part 60 implementing its New Source Performance Standards for New, Modified and Reconstructed Fossil Fuel-Fired Electricity Generating Units.

Energy Transition Intelligence
ByMatthew Keillor, Editor, Enverus Intelligence

In March 2021, the Biden administration set a goal of deploying 30 GW of offshore wind capacity in the U.S. by 2030. These efforts have faced significant growing pains.

Enverus News Release - Defying peak oil predictions
Trading and Risk

Crude and product stocks are currently at levels that suggest Brent should be ~$85/bbl.

Energy Transition Power and Renewables
ByPrashant Kumar

The pace of electric vehicle (EV) sales growth has slowed down based on the most recent North American EV sales data.

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Let’s get started!

We’ll follow up right away to show you a quick product tour.

Sign up for our Blog

Register Today

Sign Up

Power Your Insights

Connect with an Expert

Access Product Tour

Speak to an Expert