Despite a recent spike in oil prices, energy industry chiefs warn that infrastructure investment in the North Sea will not jump in tandem.
Scaring investors away is market volatility, they say.
Bosses from the oil and gas sector gathered last week in the Scottish coastal city of Aberdeen for an industry conference that delivered little optimism regarding the outlook for North Sea development.
Oil & Gas UK, an organization representing Britain’s offshore energy industry, hosted the Aberdeen gathering amid a sharp domestic downturn that has curbed business investment across the country.
“Businesses have already found 2009 a turbulent, tough year and the UK offshore oil and gas industry is no more immune to these pressures than the rest of the economy,” Oil & Gas UK said in a statement. “There is growing concern that the rapid fall in oil prices and the freezing of capital markets will impair investment and suppress production in the North Sea, with wider implications for companies and employment across the supply chain.”
Oil prices, despite a solid rally in recent months, languish more than 50 percent beneath record highs struck one year ago.
“Even the short term, recovery in oil prices of the last two or three months is way too early to positively impact people’s decision [to invest] in the long term,” Bob Keiller, chief executive of energy industry services provider PSN, said.
“The volatility [of oil prices] has affected the confidence in investments,” added Keiller in Aberdeen, a city whose wealth has ballooned since the discovery of oil in the neighboring North Sea during the 1970s.
According to Oil & Gas UK, expenditure on North Sea exploration was down 70 percent at the start of this year compared to a year earlier.
Investment that totaled £5 billion (US$8.1 billion) last year could fall to £2.5 billion this year, the industry body said.
Malcolm Webb, president of Oil & Gas UK, said that erosion in capital expenditure for North Sea exploration had begun in 2006, when oil prices were far below current levels.
“Our statistical review shows that UK [oil] production has dropped 38 percent since 2000 to 2008. When I listen to people discuss what I call the ‘seductive run up’ in oil price, I am worried that this is masking a much less talked about fact — gas prices. They continue to fall. When you assume that 50 percent of North Sea production is gas, the average North Sea realization today is still around US$40 per barrel of oil equivalent,” he said.
Soaring costs of exploration have hampered the industry, one expert said.
“Between 2004 and 2008 the cost of operations has more or less doubled,” said Alex Kemp, professor of petroleum economics at the University of Aberdeen Business School.
SECURITY: As China is ‘reshaping’ Hong Kong’s population, Taiwan must raise the eligibility threshold for applications from Hong Kongers, Chiu Chui-cheng said When Hong Kong and Macau citizens apply for residency in Taiwan, it would be under a new category that includes a “national security observation period,” Mainland Affairs Council (MAC) Minister Chiu Chui-cheng (邱垂正) said yesterday. President William Lai (賴清德) on March 13 announced 17 strategies to counter China’s aggression toward Taiwan, including incorporating national security considerations into the review process for residency applications from Hong Kong and Macau citizens. The situation in Hong Kong is constantly changing, Chiu said to media yesterday on the sidelines of the Taipei Technology Run hosted by the Taipei Neihu Technology Park Development Association. With
CARROT AND STICK: While unrelenting in its military threats, China attracted nearly 40,000 Taiwanese to over 400 business events last year Nearly 40,000 Taiwanese last year joined industry events in China, such as conferences and trade fairs, supported by the Chinese government, a study showed yesterday, as Beijing ramps up a charm offensive toward Taipei alongside military pressure. China has long taken a carrot-and-stick approach to Taiwan, threatening it with the prospect of military action while reaching out to those it believes are amenable to Beijing’s point of view. Taiwanese security officials are wary of what they see as Beijing’s influence campaigns to sway public opinion after Taipei and Beijing gradually resumed travel links halted by the COVID-19 pandemic, but the scale of
A US Marine Corps regiment equipped with Naval Strike Missiles (NSM) is set to participate in the upcoming Balikatan 25 exercise in the Luzon Strait, marking the system’s first-ever deployment in the Philippines. US and Philippine officials have separately confirmed that the Navy Marine Expeditionary Ship Interdiction System (NMESIS) — the mobile launch platform for the Naval Strike Missile — would take part in the joint exercise. The missiles are being deployed to “a strategic first island chain chokepoint” in the waters between Taiwan proper and the Philippines, US-based Naval News reported. “The Luzon Strait and Bashi Channel represent a critical access
Pope Francis is be laid to rest on Saturday after lying in state for three days in St Peter’s Basilica, where the faithful are expected to flock to pay their respects to history’s first Latin American pontiff. The cardinals met yesterday in the Vatican’s synod hall to chart the next steps before a conclave begins to choose Francis’ successor, as condolences poured in from around the world. According to current norms, the conclave must begin between May 5 and 10. The cardinals set the funeral for Saturday at 10am in St Peter’s Square, to be celebrated by the dean of the College
RSS