The pick-up of drilling activity in offshore UK will continue, on the back of high oil prices and 2012 budget reforms supporting production and development, according to Research and Market’s “United Kingdom Oil and Gas Report Q3 2012.
The report notes that the clarification of budget rules concerning the decommissioning of defunct infrastructure in the North Sea will continue the trend that has been seen of larger companies offloading mature assets to smaller independents, or companies wishing to de-risk their portfolio with safe assets in the North Sea. This is projected to slow the rate of decline in the UK’s oil and gas production.
The main trends and developments highlighted in the UK Oil and Gas Report are:
In March 2012, the Department for Energy and Climate Change (DECC) released the UK’s oil and gas production figures.
A Deloitte study in April 2012 highlighted a 22% y-o-y increase in the number of wells drilled on the UK Continental Shelf in the first quarter of 2012, on the back of higher oil prices. This is in line with BMI’s anticipation of a rise in North Sea investment in 2012.
Recovery oil consumption projected to lift slightly to 1.63mn bpd by 2016, racking up an import bill of US$24.3 billion.
For 2012, BMI forecasts gas production to be 50.45 billion cubic meters (bcm). By 2016, gas output is expected to fall to 44.89 bcm without significant new additions to reserves. A cold snap in the first half of 2012 makes it very likely that gas consumption will increase more than proportionately to GDP growth. Gas demand is projected to bounce back to 94.63 bcm in 2012 from 92.77 bcm in 2011. Should demand rise to 103.96 bcm in 2016, as the forecast suggest, gas imports would hit 59.07 bcm, costing the country US$29.09 billion.
At the time of writing the report, authors assumed an OPEC basket oil price for 2012 of US$111.47/bbl, falling to US$107/bbl in 2013 and US$99/bbl in 2016. Global GDP in 2012 is forecast at 3.8%, up from an assumed 3.4% in 2011, reflecting a faltering recovery in the U.S. and an uncertainty with regard to the eurozone debt crisis. For 2013, growth is estimated at 3.8%.
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