British Offshore Energy to Shrink Further in 2013

British Offshore Energy to Shrink Further in 2013

While investment levels are rising, the North Sea is one of the most mature basins in the world and faces unprecedented challenges.

LONDON -- Hit by aging assets and infrastructure,  Britain's offshore oil and gas output is expected to fall further this year, industry body Oil & Gas UK said on Wednesday.

Annual production in 2013 is forecast to stand at 1.2-1.4 million barrels of oil equivalent per day (boepd), Oil & Gas UK said.

That was lower than its previous forecast of 1.45-1.5 million boepd, and compared with daily output of 1.54 million in 2012.

Despite falling output, the group's chief executive Malcolm Webb hailed the sector's record level of investment, which stood at a total of £13.5 billion this year.

"Despite impressive investment in new developments, the production efficiency of existing assets has been in worrying decline, with a number of fields failing to produce as expected," Webb said .

"The DECC (Department of Energy and Climate Change) and the industry are working to tackle this serious concern through a joint task group."

A raft of recent tax incentives have helped spur record levels of investment in the UK continental shelf, widely known as the North Sea, after years of decline in investment and production.

However, although investment levels are rising, the North Sea is one of the most mature basins in the world and faces unprecedented challenges.

North Sea oil and gas production has been declining since striking a peak of 4.0 million boepd in 1999/2000.

Output has been hit by natural rates of decline at mature fields, high development costs and a wave of punitive taxes over the past decade.

On Monday, Norwegian state controlled energy group Statoil sold interests in oil and gas fields off Norway and off the British Shetland Islands to Austrian energy company OMV for $2.65 billion (1.99 billion euros).

An important part of the package was an agreement for the two companies to collaborate "to develop new technologies for the extraction of oil and gas from ripe fields."

Copyright Agence France-Presse, 2013

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