Europe is one of the smallest oil and gas producing continents in the world, only beating Oceania. While output in most European countries is now at a historic lows, exploration for new sources of both conventional and unconventional oil and gas is ongoing. The effort, however, is being increasingly hampered by the maturity of many of the conventional plays and producer country goals to become "climate neutral" in the coming decades.
The general trend is that
the domestic European supply is declining, and the import need of gas in particular
is increasing. A trend that’s continued for decades and will be sustained into the
foreseeable future.
As of 2021, Norway followed
by the UK are the largest oil and gas producers in Europe. The other producing countries
include Denmark, Italy, Romania, Turkey, Ukraine, Germany, Netherlands and Poland.
Many oil producing countries in Europe are nearing their peak production. Only Norway
with a production of 2.2Mbpd and the UK with 1Mbpd are significant producers of
crude oil. For the UK, oil production peaked in the 1990s, and has since declined
rapidly until the country became a net importer of oil around 2010.

Norway
Norway is betting on hydrogen
and offshore wind for its energy transition but will continue to extract oil and
gas until 2050 and beyond in accordance with its long-term energy strategy.
Europe's largest oil and gas
producer will continue to hold regular licensing rounds, offering exploration acreage
to energy firms. The government anticipates oil and gas extraction, which made Norway
one of the world's wealthiest nations, will naturally decline by 65% by 2050. Consequently,
only Norway remains as an important European source of oil and gas supply into the
foreseeable future.
UK
UK North Sea operators have
recently expressed concern over a potential government move to curb offshore licensing
as the sector seeks to recover from the lowest levels of investment in at least
two decades.
The UK upstream industry produced
just over 1Mbpd of oil in 2020, while also meeting about half the country's gas
needs. The industry intends to play a central role in the transition to greener
forms of energy and technologies such as carbon capture and storage. Oil and gas
are still expected to meet 20-25% of UK energy demand in 2050, down from 70-75%
at present.
Denmark
Denmark has agreed to ban
new exploration and end its oil and gas production from the North Sea by 2050 as
part of the country's efforts to become "climate neutral" in the coming
decades. Denmark, for years the third-largest oil and gas producer in Europe behind
Norway and the UK, became a net oil importer in 2018 after 25 years as a net exporter
due to output declines in the North Sea.
Oil production peaked in 2004
at 390kbpd but has been averaging about 122kbpd this year. Gas production peaked
in 2005 at 25Mcmpd and has recently been around 3.8Mcmpd.
The aging Tyra field, Denmark's
largest gas field, is integral to the Danish gas industry, with more than 90% of
the country's production processed through its facilities. But the field closed
in September last year for redevelopment work due to seabed subsidence and is not
expected to restart production until mid-2023.
As a result, Denmark's oil
and gas output is expected to recover briefly by 2025 before resuming its decline.

Italy
New restrictions on areas
for exploration and production offshore of Italy has pushed activities away from
the Tyrrhenian Sea and over to deeper waters west of Sardinia. The changes which
effectively halve the area available for discovery have raised concerns that the
country will fail to reduce its high demand on energy imports. Italy produced about
102kbpd in 2021.
Romania
Romania could
switch from a nearly self-sufficient gas market to an import-dependent country within
a decade if it fails to develop its offshore Black Sea production. The country could
reverse the natural decline at maturing onshore fields by providing the correct
incentives for offshore production in its economic zone of the Black Sea, where
total reserves could amount to 200Bcm.
In 2021,
overall crude oil production is forecast declined by 4.7% to 73kbpd y-o-y, while
natural gas production fell 6.2% y-o-y to 11Mcmpd. OMV Petrom report crude oil and
natural gas production cover around 40% of the country’s annual demand.
Turkey
In 2020, Turkey announced
the discovery of a massive, 320Bcm natural gas field in the Black Sea, in an exploration
zone called “Tuna-1”. If the find ends up being verified, it promises to transform
production, distribution and export flows both regionally and throughout the global
energy market. Turkey has shared data on its discovery with US energy majors Chevron
and Exxon Mobil ahead of possible cooperation in extracting the gas.
Ukraine
Ukraine considers the oil
and gas industry as a strategic sector to achieve independence from foreign oil
and gas imports. The country continues to improve the output and production of oil
and natural gas, all efforts aimed at increased energy independence. It continues
to follow a path to energy security and independence though legislative reforms.
In 2019, a decline of natural
gas production in Ukraine was recorded for the first time in four years. Gas prices
halved and falling revenues from natural gas sales reduced investment. The structure
of hydrocarbons production in Ukraine is natural gas 89%, oil 8%, and gas condensate
3%.
Germany
Oil and natural gas production
in Germany continues to decline sharply, due to further reductions in drilling activities,
concessions and production in the past year while capacity expansion of underground
storage facilities for natural gas are planned. Active drilling projects have fallen
to seven, down 75% compared to 2019 and the area of permitted fields has decreased
by around 25% to 35,500km2.
In 2020, crude oil production
fell by 1.4% to 1.9Mbbls and natural gas production by 15% to 5.6Bcm y-o-y. Deposits
located in Lower Saxony still account for 94% of the raw natural gas extracted in
Germany. Domestic production, however, only accounts for 5% of the nationwide demand
for natural gas.
In the midst of the country’s
energy turn around, Germany still relies heavily on imports of fossil fuels, as
its domestic resources are largely depleted, or their extraction is too costly.
However, the planned decarbonisation of all sectors by 2050 should all but eliminate
fossil fuels from Germany’s energy consumption. Future dependence will focus on
renewable electricity or sustainable fuel imports, such as green hydrogen.
Netherlands
In the Netherlands production
of gas from both onshore and offshore is falling off a cliff at the moment, and
renewables have to pick up drastically in order to meet demand. To bridge the gap,
gas import will be the only feasible solution for the medium term. For the first time, the country
became a net importer of gas on an annual basis last year, reflecting the steady
decline in supplies coming from North Sea fields. In March 2020, the Dutch government
announced it will cut production at the giant Groningen gas field to 12Bcmpa by
2022, and to zero by 2030. In 2021, crude oil and gas production are forecast to
reach 8kbpd and 68Mcmpd respectively.
Poland
Poland produces small quantities
of crude oil and natural gas, and it is a net crude oil and natural gas importer.
The 2021 forecast crude oil production is 11Mcmpd. The country contains shale resources,
but companies exploring for economically recoverable volumes have had underwhelming
results. As a result, exploration work has been discontinued. There are four oil-producing
companies in Poland, belonging to two capital groups: PGNiG and Grupa. PGNiG, which
is majority-owned by the government, is by far the largest, accounting for 81% of
domestic production, mostly from on-shore wells.

Turning Point for Energy Companies
European oil and gas companies
are all heading in roughly the same direction regarding fossil fuel production,
with some differences in approach. The momentum for change is clearly building.
In Europe, especially, the pandemic is proving to be a catalyst for more action
by energy companies and others. Europe’s largest oil and gas producer Shell expects
oil production will gradually decline 1 - 2% annually, underscoring the company’s
desire to shift to greener energy.
Despite oil and gas demand
revival since last spring’s collapse, and price increases Shell and other companies
have realised that oil and gas are no longer the mainstays previously counted on,
so they are investing more in renewables such as wind, solar and hydrogen.
BP stated in 2020 that it
would probably cut oil and gas production by 40% by 2030. Last year, the company’s
production fell 10%, mostly because of sales of oil fields.
Shell is beefing up its previously
announced efforts to reach net zero carbon emissions by 2050 with tighter interim
goals. Although Shell has stated its oil production has peaked, its natural gas
flows will keep its overall fossil fuel output flat. The company will maintain LNG
exports, as an important business in which it is a world leader and as a transition
fuel between petroleum and renewables.