INVESTMENT in the North Sea will plunge by around 30 per cent this year amid the slump in oil and gas prices triggered by the coronavirus experts have warned.
Rystad Energy has forecast that spending on new North Sea assets will fall to $5.6 billion this year (£4.5bn) from $7.8bn in 2019.
The forecast by the energy consultancy highlights the scale of the challenges facing companies working in the North Sea as they grapple with the fallout from the coronavirus.
READ MORE: Will coronavirus turn North Sea into a bargain basin?
A range of companies have announced plans to slash spending on new developments and to shed jobs in response to the fall in the oil price in recent weeks.
Industry body Oil & Gas UK warned in April that 30,000 jobs were at risk in the North Sea supply chain.
The outlook in terms of investment appears to have got more gloomy in recent weeks.
Rystad expects global investment in new assets to fall by 29% this year to a 15-year low of $383bn, from $539bn in 2019. At the start of the crisis Rystad expected total investment to fall by up to 20%.
The Scottish Goverment yesterday launched a £62m Energy Transition Fund. This will help oil and gas firms respond to the challenges posed by the coronavirus and to diversify over the next five years into areas such as renewable energy.
Rystad's analysis suggests the North Sea is likely to be hit harder than some other areas. It expects total global investment in offshore projects to fall by around 15%.
The North Sea is regarded as a mature basin. While oil and gas firms cut costs in the area amid the downturn that followed the crude price fall from 2014 to 2016, it is still seen as a relatively expensive area to operate in.
The Rystad forecast is based on an analysis of recent announcements by more than 100 oil and gas companies around the world.
Brent crude fell to an 18-year low of $15.98 per barrel in April as demand for oil and gas collapsed in response to the lockdowns that were imposed around the world.
READ MORE: Leading oil and gas entrepreneur says now may be time to invest in North Sea
The price has rallied following moves by major exporters to support the market and the easing of lockdown measures in some countries but is still well down on the year. Brent sold for around $39/bbl yesterday, against about $70/bbl in January.
Rystad has warned the price could fall if there are fresh spikes in coronavirus infection rates or exporters renege on promises to cut production.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel