Global upstream oil and gas: new challenges ahead in 2021

What are the key trends to watch in the upstream oil and gas industry in 2021?

Tackling unprecedented challenges became the new normal for the oil and gas industry in 2020. In rising to those challenges the sector challenged stakeholders’ perceptions of what was possible – and set records for responsiveness in extraordinary circumstances.

There’s little doubt that uncertainty and contingency will continue to be recurring themes in the year ahead. But dealing with unknowns is a core industry strength, and we’re also seeing great resilience and efficiency. While there are many challenges ahead, are the foundations being laid for a broad sector recovery? What are the biggest trends to watch out for?

Drawing on powerful insight from Wood Mackenzie Lens, our team of global experts came together to share their predictions for the industry in 2021:

1. Continued underinvestment will precede higher prices
2. The supply chain will bounce off rock bottom
3. Governments will start to make harvest versus growth decisions
4. Momentum to reduce carbon emissions will grow
5. Exploration will be profitable, just with less fanfare

Asia Pacific

2021 is poised to be a year of change. We see new players entering the region, operators embracing the challenges of the energy transition, and decarbonisation being a key target for the year. Upstream spend will be down, but doing more with less is back in vogue and some key projects will progress.


After a year of change and uncertainty, the Australasian upstream sector is set for a rebound. In 2021 we expect more than US$11 billion of project investment to be sanctioned, including Australia’s first LNG import terminal.


With consolidation underway and capital restraint firmly ingrained, is 2021 a chance for Canada to demonstrate that it’s possible to maintain and even grow production without large cost increases, deliver investor returns and lead on ESG investments?


The Caspian upstream sector is still regrouping from the crises of 2020. And 2021 will be another year that redefines how we think of regional competitiveness.

In this report, we highlight the key themes to watch in the year ahead, from drilling déjà vu in Azerbaijan to Kazakhstan’s work to avoid an investment cliff edge.

Continental Europe

There are cautious signs of optimism for Europe’s upstream industry in 2021. In this report, our experts explore some of the big questions for the year ahead, including: what’s next in the Black Sea after Turkey’s giant discovery? Why is it a pivotal year for the Netherlands upstream industry? And where are the upcoming licensing opportunities?

Latin America

After the turmoil of 2020, we expect Latin America’s upstream market to slowly begin heating up again in 2021. So what is the appetite for investment? Where are the likely M&A opportunities? And which early-stage initiatives could shape the energy transition in the region?

Middle East and North Africa

What lies ahead for the MENA region in 2021? How will producers react to a fragile and uncertain demand outlook? Will 2021 be another slow year for investment? And will we finally see a paradigm shift for the energy transition in the region?

North Sea

2021 will be a year to rebuild. Glasgow’s COP26 will help keep the energy transition at the top of the agenda, while corporate consolidation should keep dealmakers busy.

Russian Federation

2021 will be a big year for Russia’s upstream as several key projects move forward.

Our experts pick out five key themes to watch, from advancing gas projects in East Siberia and the Russian Far East, to the potential scale of E&A success in the Arctic. And will the energy transition in the region accelerate, or remain subdued?

Sub-Saharan Africa

The energy transition will dictate how the upstream year unfolds in Sub-Saharan Africa. It could be turbulent amid continuing economic fall-out from 2020.

US Gulf of Mexico

The US Gulf of Mexico remained relatively unscathed in 2020. Production dropped by just 4% from 2019, and no major projects were cancelled. In 2021 we expect to see production and investment rebound, focus on carbon emissions intensify – and some companies making bold operational statements. But we also see fiscal and regulatory risks and muted M&A.

US Lower 48

US onshore producers have had to deal with the most chaotic year in the history of tight oil. We expect more stability in 2021, but there’s still plenty to keep boards on their toes.

What could a 70% reinvestment rate mean for the sector? Will ESG take a step forward? And what M&A will look like in 2021?

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