Britain North Sea investment to fall sharply

Britain North Sea investment to fall sharply

HomeOthersBusiness Tue Feb 24, 2015 5:52PM

Britain is bracing for a sharp fall in investment in its North Sea projects next year as oil prices keep falling and production costs continue to rise, an industry lobby group says.

In its annual survey, Oil & Gas UK said it expects investment in the North Sea’s prospects to drop to £8 billion ($12.35 billion) in 2016 from £14.8 billion in 2014.

The lobby group painted a bleak picture of prospects in the North Sea which recorded £5.3 billion in losses in 2014, the worst since the 1970s.

The chief executive of Oil & Gas UK, Malcolm Webb, said North Sea’s total output could increase marginally this year, to 1.43m barrels of oil equivalent (BOE), but only 14 new exploration wells were spudded in 2014, down from the 25 that had been expected.

“Without sustained investment in new and existing fields, critical infrastructure will disappear, taking with it important North Sea hubs, effectively sterilising areas of the basin and leaving oil and gas in the ground,” the Guardian reported Webb as saying.

He added that “cost and efficiency improvements of up to 40%” are needed to give North Sea a “viable future.”

World oil companies including North Sea investors Shell and British Petroleum (BP) have announced billions of dollars in capital expenditure (capex) costs following a slump in oil prices since last June.

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