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The Implications of Oil and Gas Field Decline Rates

Executive summary

Discussions on the future of oil and gas often overemphasise demand drivers and underappreciate supply drivers

Debate over the future of oil and natural gas tends to focus on the outlook for demand, with much less consideration given to how the supply picture could develop. This asymmetry is misplaced and a thorough understanding of the rate at which production from existing oil and gas fields declines over time is more important than ever. The International Energy Agency (IEA) has long examined this issue. Decline rates – the annual rate at which production declines from an existing oil or gas field – underpin our analysis of market balances and investment needs across all outlook scenarios.

Nearly 90% of annual upstream oil and gas investment since 2019 has been dedicated to offsetting production declines rather than to meet demand growth. Investment in 2025 is set to be around USD 570 billion, and if this persists, modest production growth could continue in the future. But a relatively small drop in upstream investment can mean the difference between oil and gas supply growth and static production. At the same time, less investment is required in a scenario in which demand contracts.

A detailed look at today’s global supply picture

The composition of oil and gas production has changed rapidly in recent years with the notable rise of tight oil and shale gas. In 2000, conventional oil fields contributed 97% of total oil output globally, however, by 2024 this share had fallen to 77% as a result of rising output from unconventional fields. In the case of natural gas, around 70% of the 4 300 billion cubic metres (bcm) produced today is from conventional fields, with nearly all of the rest being shale gas produced in the United States. Even with the shale revolution, overall oil and gas output still relies heavily on a small number of supergiant fields, largely in the Middle East, Eurasia and North America, which together accounted for almost half of global oil and gas production in 2024.

Detailed analysis of the production records of around 15 000 oil and gas fields from around the world reveals that the global average annual observed post‑peak decline rate is 5.6% for conventional oil and 6.8% for conventional natural gas. This varies widely by field type: supergiant oil fields decline by an average of 2.7% annually, while the average for small fields is more than 11.6%. Onshore oil fields decline more slowly, by an average of 4.2% per year, than those located deep offshore at 10.3%. The Middle East, which holds the world’s largest conventional onshore fields, has the lowest oil observed post-peak decline rate at 1.8%, while Europe, which is has a very high share of offshore fields, exhibits the highest decline rate at 9.7%.

In the absence of investment, supply falls quickly

Alongside the observed rate declines that are derived from field production histories, it is possible to estimate the natural rate declines that would occur if all capital investment were to stop. These declines are even steeper. If all capital investment in existing sources of oil and gas production were to cease immediately, global oil production would fall by 8% per year on average over the next decade, or around 5.5 million barrels per day (mb/d) each year. This is equivalent to losing more than the annual output of Brazil and Norway each year. Natural gas production would fall by an average of 9%, or 270 bcm, each year, equivalent to total natural gas production from the whole of Africa today.

Natural decline rates are becoming steeper. In 2010, natural decline rates would have led to a 3.9 mb/d annual drop in oil production and 180 bcm annual drop in gas production. The sharper natural decline rates observed now compared with 2010 reflects the higher reliance today on unconventional sources, changes in the mix of conventional production (such as more deep offshore fields and NGLs), and a higher supply base.

Most unconventional sources of oil and gas production generally exhibit much faster decline rates than conventional types. If all investment in tight oil and shale gas production were to stop immediately, production would decline by more than 35% within 12 months and by a further 15% in the year thereafter. Shale plays in the United States are also becoming “gassier,” raising overall decline rates as oil-rich fields mature.

Under natural decline rates, global oil and gas supply would become much more concentrated among a small number of countries in the Middle East and Russia, with implications for energy security. Most oil production in the United States comes from fast declining unconventional sources, while in the Middle East and Russia most oil is produced from slowly declining conventional supergiant fields. Absent further capital investment, advanced economies would face rapid production declines – a 65% drop over the next decade – while declines would be shallower in the Middle East and Russia (45%).

The oil and gas industry needs to run fast to stand still

If current levels of production are to be maintained, over 45 mb/d of oil and around 2 000 bcm of natural gas would be needed in 2050 from new conventional fields. Investment in existing conventional oil and gas fields – for example through well workovers, infill drilling, waterflooding – slows production declines from the natural decline rate. There will also be a contribution to the supply balance from oil and gas projects that are still ramping up, from projects that have already been approved for development, and from ongoing investment in unconventional resources. Still, this leaves a large gap that would need to be filled by new conventional oil and gas projects to maintain production at current levels, although the amounts needed could be reduced if oil and gas demand were to come down.

Around 230 billion barrels of oil and 40 trillion cubic metres (tcm) of gas resources have been discovered that have yet to be approved for development. The largest volumes are in the Middle East, Eurasia, and Africa. Developing these resources could add around 28 mb/d and 1 300 bcm to the supply balance by 2050.

Filling the remaining supply gap to maintain today’s production through to 2050 would require annual discoveries of 10 billion barrels of oil and around 1 000 bcm of natural gas. These amounts are just above what has been discovered annually in recent years. Developing these resources would add around 18 mb/d and 650 bcm of new oil and gas production by 2050.

In recent years, it has taken almost 20 years on average to bring new conventional upstream projects online. This represents the time from the issuing of a new exploration licence to the moment of first production. This includes five years on average to discover the field, eight years to appraise and approve it for development, and six years to construct the necessary infrastructure and begin production. Around two-thirds of conventional oil and gas projects approved in recent years have been expansions of existing fields, and more than 70% of recent conventional approvals are offshore.

Decline rates are central to IEA modelling and analysis

As oil and gas supply increasingly relies on fields with higher decline rates and complex operating environments, the interplay of investment decisions, economics, and regulation will shape supply resilience and market stability. A detailed understanding how this picture could evolve underpins the IEA’s analysis of investment needs in each of our outlook scenarios, including those that achieve ambitious climate objectives, and informs our analysis of the implications of these scenarios for energy security, markets, prices, and emissions.