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Cheap oil threatens North Sea fields

Low oil prices have strained the budgets of countries, which depend mainly on fossil fuel exports. And the slide have also affected the fields themselves, which are “no longer economically viable” in this environment.
Low oil prices could bring about the closure of about 140 oil fields in Britain’s North Sea in the next five years, according to UK-based consultancy group Wood Mackenzie in a report released Wednesday.

The group said these fields are no longer “economically viable,” even if oil prices return to $85 a barrel (76 euros) from the present level of around $50.

“The current low oil price has brought into stark relief that this cannot continue indefinitely,” the report said.

Global crude oil prices have fallen by around 60 percent since June 2014. In addition to affecting countries’ economies – like Russia, Ghana, Canada and Brazil, the slide in crude prices has particularly weighed on aging oil fields and platforms in the North Sea.

“Last year, more was spent than was earned from production, a situation which has been exacerbated by the continued fall in commodity prices,” said Deirdre Michie, chief executive of Oil & Gas UK industry association, which released a similar report on Wednesday.

“This is not sustainable,” she added.

Wood Mackenzie also warned the current context could force the delay or cancellation of 38 new North Sea fields that had been expected to open in the next five years.

But Oil & Gas UK has vowed to avoid premature decommissioning and to retain the infrastructure required “to get as much oil as economically viable out of the North Sea.”

el/nz (AFP, Wood Mackenzie, Oil & Gas UK)

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