A new upstream report by Wood Mackenzie estimates the remaining worth of international oil companies’ upstream portfolios at slightly more than US$2.6 trillion, shared between some 650 companies and 80 countries.

The report, “Maining The Pursuit Of Upstream Value,” finds that in pursuit of further growth, there has been a clear shift towards “volume plays” characterized by huge reserves and comparatively low contractor margins.

WoodMac head of Middle East and Asia-Pacific upstream research Iain Brown says, “There is huge remaining growth potential and volume plays are becoming increasingly important to IOCs’ value propositions. Companies are facing the prospect of lower margins, as they seek to produce oil and gas from more difficult and less accessible reservoirs. This may be oil sands or tight gas in North America, low-margin oil in Iraq or Abu Dhabi, or sour gas in remote parts of the Far East.”

The report attributes nearly 33% of total value to the five largest international companies—Shell, ExxonMobil, Chevron, BP and Total. Shell and ExxonMobil alone have portfolios estimated at US$220 billion, although the top five IOCs still lag behind the world’s major national oil companies, such as Saudi Aramco, PetroChina and Gazprom.

“Some NOCs have broadened their horizons in the last 20 years, successfully competing with their international counterparts. They are now regular, front-line competitors in the world’s major oil and gas provinces, adding to the access challenge for valuable new projects and acquisitions,” says Brown.

Future value expectations are dominated by the U.S., Canada and Russia. The prominence of these countries is the result of three factors: the scale of the resource, political stability and—in regard to the U.S. and Canada—fiscal terms promoting development of new production capacity.

The report finds a relationship between the scale of a country’s remaining reserves and the upstream value proposition for internatonal E&Ps. The Netherlands and the U.K. are advancing towards resource depletion, but deliver higher values to investors (more than US$12 per barrel of oil equivalent). By contrast, Russia and Libya, with tens of billions of barrels nominally accessible to IOCs, offer less than US$3.50 per barrel.

“Cutting-edge technologies are needed to extract the difficult oil and gas towards the latter stages of field life, or from more challenging reservoirs. Countries in these circumstances tend to offer more attractive terms to attract essential skills and investment to extend production life,” says Brown.

He adds that the upstream industry is evolving rapidly, and many opportunities remain for international E&P value creation.