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Oil be damned: North Sea oil heading for the rocks as prices crash

The UK’s North Sea oil industry is in crisis as the price of oil has fallen below the cost of sucking it out of the earth.

Oil companies are haemorrhaging workers and axing exploration budgets as profits are erased.

The price of oil is lingering at around $60 a barrel. This makes almost no new projects in the North Sea profitable, Robin Allan the chairman of the independent explorers’ association Brindex, told the BBC.

“It’s almost impossible to make money at these oil prices”, Allan said. “It’s a huge crisis.”

“This has happened before, and the industry adapts, but the adaptation is one of slashing people, slashing projects and reducing costs wherever possible, and that’s painful for our staff, painful for companies and painful for the country.

“It’s close to collapse. In terms of new investments - there will be none, everyone is retreating, people are being laid off at most companies this week and in the coming weeks. Budgets for 2015 are being cut by everyone.”

2013 saw the highest level of investment ever in the North Sea, but this was not enough to greatly increase the amount of oil extracted. Oil has been in decline in the UK since 1999 as reserves have dwindled.

According to the BBC a wave of job losses are forecast for the next 18 months.

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Copyright:
London Loves Business
Published on:
December 18, 2014
Source url:
http://www.londonlovesbusiness.com/business-news/business/9456.article
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