UK oil and gas industry suffers worst year in decades

The North Sea oil and gas industry lost £5.3 billion in 2014, the worst figure since the 1970s, according to a new report published by industry body Oil & Gas UK.

The report also said the industry’s revenues amounted to only more than £24 billion for 2014, the lowest since 1998, due to plunging oil prices. Crude prices, on a downwards trend since mid-2014, have slumped to as low as $50 a barrel this year. Oil & Gas UK, which last year estimated investment in new projects at $8.5 billion over the next three years, put it at around £3.5 billion this year.

Large areas of the North Sea could be “sterilised”, because oil companies would be unable to afford exploiting unused fields, with the cost of producing a barrel of oil rising to a record high of £18.50, Oil & Gas UK said.

Production at the North Sea still remained very strong in 2014, at more than 1.4 million barrels of oil equivalent per day, according to the industry body. However, 14 new exploration wells were drilled in 2014, compared with the 25 expected and output is expected to only increase marginally in 2015, to 1.43 million barrels of oil equivalent, according to the report.