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UPDATE 1-Oil majors seen boosting output by fifth by 2020
* Oils majors show appetite for high risk exploration
* Deep-water, offshore Arctic, Brazil key new areas
By Dmitry Zhdannikov
LONDON, June 27 (Reuters) - Global oil majors will boost p roduction by 20 percent by 2020 after a decade of zero growth as they ramp up costly and high risk exploration, research showed on Wednesday.
A study by research firm Wood Mackenzie showed oil majors BP , Shell, Exxon Mobil, Chevron, ConocoPhillips, Statoil, Eni and Total will increase production from 8 billion barrels of oil equivalent per year now to 10 billion by the end of this decade.
"There was a period when they were relatively out of the exploration game, but I think they are right back in there," said Wood Mackenzie vice president Andrew Latham.
"The examples of Exxon getting in the Kara Sea (in Russia) or Statoil going into the Russian Barents Sea is evidence of their willingness to take on a lot of new play risks at very high cost."
Latham cited other examples such as Shell and Conoco exploring offshore Alaska and BP going into Canada's B eaufort Se a and the waters off the south coast of Australia.
The lack of growth for the majors has been a concern for investors as not only have they failed to increase output, but have also been unable to replace it with new reserves at a time when big exploration successes have been led by mid-sized independents, such as Tullow or Anadarko.
According to WoodMac estimates, the eight majors have replaced only half of their production with new discoveries of conventional oil and gas reserves over the last decade.
Their share of global exploration spending has decreased to 30 from 40 percent over the past 10 years.
"This year their weighted average (of exploration spending) is 15 percent higher than last year. They have at least arrested that decline in market share," said Latham.
BIG BRAZILIAN GAME
Global exploration spending on conventional oil and gas have more than quadrupled over the past decade to reach $85 billion this year.
However, the big chunk of that increase is attributed to global inflation led by higher costs of services, labour, steel and power and as a result a four-fold increase translates only in about 30 percent more activity, according to WoodMac.
However, exploration of conventional oil and gas continues to find substantial reserves and is outpacing discoveries of non-conventional resources, said Latham.
During the past decade, total global reserves discoveries averaged 20 billion barrels of oil equivalent per year with Brazil being the main driver of growth.
According to WoodMac estimates, 30 wells drilled in Brazil Santos pre-salt oil area found 30 billion barrels of oil equivalent.
By comparison, U.S Gulf needed over 800 wells to confirm reserves of over 20 billion and the northern part of the North Sea had over 1,000 wells drilled to confirm reserves of around 60 billion.
"It (Brazil) is completely unprecedented. There is an awful lot more reserves to come," said Latham adding that on the gas front East Africa and the eastern Mediterranean were emerging as the main contributors to global reserves additions.
Geologically, global reserves additions have been driven over the past decade by deepwater exploration with both volumes of discoveries and reserves additions per well far eclipsing onshore and shelf exploration.
This will likely remain the key trend for the years to come as Canada, the United States, Greenland, Norway and Russia explore their Arctic waters.
"There are hundreds of billions of barrels to be found in the Arctic and 80 percent of this is offshore," said Latham.
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