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North Sea oil fields in worst plight of past 15 years As oil prices hit rock bottom, thousands lose jobs and government revenues slump 42 percent in 12 months PNA Staff
Britain’s North Sea oil fields are in their deepest crisis of the last 15 years and the outlook is even worse, experts have told the BBC. Stephen Boyle, head of business economics at the Royal Bank of Scotland, said a “lot of rationalization” will be needed among major operators regardless of what happens to oil prices over the next few years.
Professor Alexander Kemp said that so long as world prices are around $10 a barrel, only 12 of the 14 prospective new North Sea fields he has studied can pay their way.
Although output has risen about 12,000 barrels per day over the past year, oil revenues to the British government from the North Sea dropped $28.75 million a day, or 42 percent from November 1997. Urgency to cut production costs Boyle said the most pressing need is for operators to lower their costs to $8 per barrel by 2002 from the current $12 (although some analysts have put the true costs at $14).
He said there is “little prospect” of an imminent rise in prices with demand weak and some OPEC members — notably Iran and Venezuela — refusing to stick to quotas, let alone reduce production.
Dr. Larry Farmer, president of oil industry equipment supplier Brown & Root, said there has already been a big cutback in spending by North Sea oil companies, which continue to scale back their spending plans. Government revenues plummet The impact on the British government’s tax revenues is dramatic. At current rates, the returns this fiscal year will drop to $4.95 billion from $33 billion earned in real terms in the mid-1980s.
The North Sea is estimated to provide 380,000 direct and indirect jobs, but thousands of cuts have already been announced.
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