A Japanese trading giant has said it expects to slash the valuation of its North Sea portfolio by around £340m in response to the oil price slump and cost increases in the area.
Marubeni said it expects to recognise a Y60bn impairment loss on "current asset in North Sea oil and gas field due to the decline in crude oil prices and the increase in development costs" in its results for the year to March.
The provision follows a near 60 per cent fall in the price of Brent crude since June, which the company said had taken it by surprise.
Noting crude prices had fallen to below $45 per barrel recently, " Marubeni President Fumiya Kokubu told reporters: "There is no mistake that this was quite different from our earlier outlook."
Brent crude traded at $48.35 per barrel yesterday, compared with 115/bbl in June. West Texas Intermediate oil sold for $45.24/bbl.
Marubeni's move provides further evidence of the toll the oil price fall is taking on the North Sea. Giants such as BP are axing hundreds of jobs and cutting contractor pay rates in response to the downturn.
The Wood Mackenzie energy consultancy warned recently that £2bn North Sea projects could be at risk over the next two years because of the oil price fall.
Experts note many fields have been put up for sale in the area. The price of assets has fallen amid the downturn.
Marubeni built a significant North Sea portfolio helped by acquisitions and exploration activity.
The company bought Energy North Sea for around £180m in 2004, giving it stakes in the Montrose, Arbroath and Arkwright fields. Japanese firms expanded in the North Sea to help meet the country's demand for energy.
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