Key facts
- Insurers are reducing premiums on upstream energy insurance for projects outside the Middle East.
- Premiums have dropped by approximately 25% year-to-date, with some reductions reaching 50%.
- This shift is driven by geopolitical uncertainties and conflict in the Middle East.
- Major oil companies are increasing exploration and investment in regions like Guyana, Suriname, Namibia, and Nigeria.
- The oil and gas industry has generated substantial value in recent years, with potential for more at higher Brent prices.
Global insurers are increasingly underwriting oil and gas drilling and construction projects outside the Middle East due to escalating geopolitical risks and conflict in the region. The uncertainties surrounding new projects in the Middle East have led insurance giants to compete for business in less volatile basins, resulting in a significant drop in premiums.
Premiums for upstream energy insurance outside the Middle East have decreased by approximately 25% year-to-date, with some insurers offering reductions of up to 50% to secure market share. This competitive pricing environment is driven by the migration of oil and gas companies seeking exploration and production ventures away from geopolitical flashpoints like the Strait of Hormuz.
Major international oil companies are doubling down on exploration and upstream projects in regions such as Guyana, Suriname, Namibia, Brazil, Turkey, and Cyprus. ExxonMobil and Chevron are making substantial investments in offshore Guyana, while Chevron is also expanding its operations in Venezuela. ExxonMobil is also investing billions in Nigeria's deepwater oil and gas fields, including the Owowo project.
Other companies are also diversifying their exploration efforts. BP has acquired stakes in offshore blocks in Namibia, and TotalEnergies is exploring opportunities in the Black Sea. Additionally, interest is growing in shale opportunities outside the U.S., with Argentina, China, Turkey, and Australia attracting attention.
Analysis from energy consultancy Wood Mackenzie indicates that the oil and gas exploration industry has generated significant value in recent years. Between 2021 and 2025, the industry is projected to create $54 billion in value after accounting for exploration spending, assuming a long-term Brent price of $65 per barrel. This value creation could more than double to $120 billion if Brent prices reach $85 per barrel.