LONDON: Ageing North Sea fields are being abandoned by oil majors and increasingly rely on national oil companies (NOC) from countries such as China and large service providers to keep the oil — and tax revenues — flowing.
In the past, the company that owned the asset operated it, but as output from mature fields has dwindled and oil majors such as BP and Shell have sold out to smaller producers, traditional models have become less economic.
The number of fields in the UK Continental Shelf (UKCS) has multiplied from 90 to 300 in the last 20 years, but the average size of new fields is shrinking fast — from 248 million barrels of oil equivalent (boe) in the 10 years from 1966 to just 26 million from 2000 to 2008. The industry urgently needs to adopt new operating models if it is to avoid leaving millions of barrels of oil in the ground as elderly platforms reach the end of their design life.
The British government, concerned about dwindling output and declining tax revenues from the North Sea, commissioned a review of the industry led by Sir Ian Wood.
The interim report called for greater collaboration by industry players in key areas such as the development of regional hubs and the sharing of infrastructure.
But helping small rivals is at best a low priority for oil majors, and at worst unprofitable, especially if their own oil and gas interests in the area have dwindled. Fortunately, China’s CNOOC and Sinopec, Abu Dhabi s Taqa and Korea’s NOC all seem willing to make big investments in the North Sea to keep the oil flowing.
Short-term profits are seen as less important than energy security and access to technical know-how.
Reuters
