UK independents thrive in UK North Sea
Small and midsized operators are benefiting the most from record oil and gas prices in the UK North Sea as they develop fields that were otherwise too costly in the past, according to Lloyds TSB Bank.
LONDON, Aug. 21 -- Small and midsized operators are benefiting the most from record oil and gas prices in the UK North Sea as they develop fields that were otherwise too costly in the past, according to a senior figure at Lloyds TSB Bank.
Andrew Moorfield, managing director and head of oil and gas sector at Lloyds TSB Corporate Markets, said the companies were enjoying exploration funding from banks for their projects despite the credit crunch.
These players, compared with their larger counterparts, were "less burdened by an established cost base and have the flexibility to explore smaller frontier fields."
Over the long term, bigger players face lower production as their fields peak, and there are fewer large fields producing billion plus barrels in a politically stable environment.
UK oil and gas productivity likely will improve in the medium term, the report said. The UK oil and gas industry holds a positive net cash balance of £1.3 billion with banks and is making repayments on bonds.
Hydrocarbons output has dropped over 7 of the last 8 years. In 2007, production declined by 1.5-2% despite around £11.5 billion of new investment. "In the long term, UK production looks set to experience a downturn, but this will be tempered by rising exports of oil-production support services to developing markets, and investment in the extraction of less accessible reserves," the report added.
"Soaring oil prices have contributed to the recent strong profit performance of global and UK oil companies; however the industry is facing its biggest challenge yet as it tries to keep up with increased demand from fast growing economies such as China and India," said Trevor Williams, chief economist at Lloyds TSB Corporate Markets. "Capital spending will need to continue rising and new fields developed in order to maintain sector growth," he added.
Contact Uchenna Izundu at email@example.com.