SOURCE COMPETITION // Example from the North Sea

Falling oil prices could lead to the closure of 140 fields in the North Sea over the next five years.

Falling global prices and geographic and product source competition are the reasons.

Many North Sea operators are accelerate plans for decommissioning the ocean drilling rigs.

Wood MacKenzie, a consultant, says that the decommissioning of the fields could go ahead even if oil prices return to $85 per barrel, from their current price of around $49.

The impact of some European countries from job and related tax revenue losses will be staggering.

The report comes after Oil and Gas UK said that 65,000 jobs had been lost in the North Sea since the slump in oil prices began last November. The trade body has warned that with so few new projects gaining approval, capital investment is expected to drop from £14.8bn last year to between £2bn and £4bn in each of the next three years.

Decommissioning is already underway in more ageing fields in the North Sea. Royal Dutch Shell is planning the decommissioning of the Brent field. Four Brent platforms – Alpha, Bravo, Charlie and Delta – have generated £20bn of tax revenue since they were brought into production in 1976.

For the complete news report in the Telegraph, log onto: http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11853279/Clock-ticking-for-North-Sea-oil-as-low-prices-threaten-closure-of-140-fields.html

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