• 3 minutes This Battery Uses Up CO2 to Create Energy
  • 5 minutes Shale Oil Fiasco
  • 9 minutes Don't sneeze. Coronavirus is a threat to oil markets and global economies
  • 12 minutes Historian Slams Greta. I Don't See Her in Beijing or Delhi.
  • 8 hours Boris Johnson taken decision about 5G Huawei ban by delay (fait accompli method)
  • 14 hours Governments that wasted massive windfalls
  • 12 hours Let’s take a Historical walk around the Rig
  • 15 hours We're freezing! Isn't it great? The carbon tax must be working!
  • 1 day Trump has changed into a World Leader
  • 14 hours Here is Why People Lose Money Trading Natural Gas
  • 1 day Beijing Must Face Reality That Taiwan is Independent
  • 54 mins Tesla Will ‘Disappear’ Or ‘Lose 80%’ Of Its Value
  • 12 hours US Shale: Technology
  • 16 hours 2nd Annual Great Oil Price Prediction Challenge of 2019
  • 22 hours Trump capitulated
  • 2 days Yesterday POLEXIT started (Poles do not want to leave EU, but Poland made the decisive step towards becoming dictatorship, in breach of accession treaty)
Alt Text

As Gas Prices Crash, Will This Shale Giant Survive?

Fracking giant Chesapeake may seem…

Alt Text

Demand Fears Are Driving Today’s Oil Markets

The outbreak and escalation of…

Alt Text

U.S. LNG Booms As Natural Gas Prices Crash

Despite the recent collapse in…

Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

North Sea Oil Sees Investment Rush

Hundreds of millions in decommissioning costs, field depletion, high taxes and low oil prices have been the highlights of media coverage of the UK’s North Sea oil industry. Yet the news is not all bad: the UK government approved a slew of tax incentives for field operators amid the oil price crash, and a few new discoveries have been made—not to mention, perhaps surprisingly, that quite a few billion dollars in M&A deals have flown into the region.

A recent report from Wood Mackenzie notes that the North Sea has in fact become the second-hottest spot for oil investments, after U.S. shale. That’s largely thanks to private equity’s renewed appetite for oil and gas investments: according to the consultancy, there’s a total of US$15 billion in PE capital waiting to be spent on North Sea acquisitions.

Already, several sizable deals have been made, including Chrysaor’s acquisition of US$3.8 billion worth of Shell North Sea assets, closed in January this year, and, most recently, French Total’s US$7.45-billion takeover of Danish Maersk Oil, most of whose assets reside in the North Sea.

In the first half of 2017, deals worth almost US$6 billion were sealed in the North Sea oil industry, the Oil & Gas Authority said in its Economic Report 2017, noting that these and future acquisitions serve as a sign of the industry’s gradual improvement and are a much-needed source of new investment that will ensure future production in the region.

Related: An Energy Independent North America Needs NAFTA

When Shell announced it was divesting part of its North Sea assets, there was concern that everyone would follow, and that this meant there would be no future for the North Sea, but this didn’t happen. Chevron still holds the rights to several of the largest undiscovered fields in the UK Continental Shelf, and Shell still retains assets producing 150,000 bpd in the area. BP, too, is keeping some of its North Sea fields, although it is currently on the lookout for a buyer for the rest.

The North Sea’s problem has always been high production costs. These high costs weighed heavily on E&Ps when prices crashed in 2014. But, as the Oil & Gas Authority notes in its report, operation costs per unit in the North Sea have fallen the most across all oil basins in the world. While this doesn’t mean that North Sea field operators can pump crude at Aramco’s production costs, it is attractive enough to motivate further investment.

BP, for instance, has cut its production costs from US$30 a barrel to about US$15, and plans to further reduce this to less than US$12 by 2020. Shell and other producers have managed to cut costs by as much as 60 percent.

The almost 50-percent tax cut for North Sea operators, from 81 to 40 percent, has also served its purpose, stimulating independent, private equity-backed players such as Chrysaor, to enter the North Sea field. The influx of new E&Ps will continue, the OGA believes, estimating that a third of total North Sea oil production by the end of 2018 will come from fields where operation started this year. That’s some really fast development, and a strong signal that one of the oldest oil-producing region in the world still has quite a few good years ahead of it.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage




Leave a comment
  • Brandon on September 22 2017 said:
    Good for Transocean to have recently acquired Songa.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play