North Sea industry leaders highlight pressure on oil and gas supply chain

Oil & Gas UK has highlighted pressure on the North Sea supply chain following the plunge in the oil price but said it had not seen any indication that significant field shut-downs are on the way.

The industry body said earlier this week that the fallout from the coronavirus had left the supply chain at breaking point amid cuts in activity offshore.

Oil & Gas UK’s sustainability director, Mike Tholen, noted yesterday that some oil services firms had started to make posts redundant. This came after they concluded that activity levels in coming months were likely to remain below what they had expected.

 Oil & Gas UK wants the Westminster Government to provide a resilience package for the industry.

However, asked if there had been any indication that firms that operate fields would take them out of production, Mr Tholen said the organisation had not seen any signs that such “turn-backs” were planned.

“Most of the portfolio in the UK is still competitive at $30 a barrel, albeit it probably doesn’t enjoy $30/bbl,” said Mr Tholen.

“So there is still the ability to sustain operations at this period, even at current prices if they prevail for a while.”

Mr Tholen noted many firms had sold output forward at higher pieces than have been offer in the spot market recently.

But he noted that many companies are still trying to get to grips with the full impact of the oil price fall on their business.

Brent crude sold for $22.15/bbl yesterday afternoon, up around $1.80/bbl on the day, amid growing tension between the US and Iran.

If fetched around $70/bbl early in January.

Source: The Herald

Read the latest issue of the OGV Energy magazine HERE.