US, WASHINGTON (ORDO NEWS) — Oil and gas companies operating in the North Sea (between the British Isles in the west, the Jutland, Scandinavian peninsulas in the east and continental Europe in the south) are in a very fragile position due to falling world oil prices to 18-year lows and a crisis in the economy UK, reports The Guardian.
The industry trade organization said investment in aging oil fields, which support about 250,000 jobs in the UK, is expected to fall by almost a third due to the collapse of the market.
Large oil companies in the future can drastically reduce their cost plans in order to try to survive against the backdrop of a fall in the market, as a result of which oil revenues can be halved.
This can lead to a drop in activity in the field of oil drilling to the levels that were last observed during the collapse of the oil market in 2016, and to a decrease in revenue for engineering companies that provide services in oil fields to large producers.
Global oil markets have recorded the most dramatic collapse in prices per generation, as oil states continue to produce more than global demand suggests, despite the slowdown in economic growth caused by coronavirus.
The pandemic may have already slowed down operations at offshore rigs, after Oil and Gas UK (OGUK), a UK trade organization, called for barring rig workers from moving to offshore oil platforms if they returned from countries affected by the virus in the previous 14 days to help protect the rest of the staff.
Deirdre Michie, chief executive officer of OGUK, said the latest oil price collapse, “coming so soon after one of the worst recessions in our history,” left the UK oil industry “in a fragile position.”
The fall in prices follows a steady decline in world gas prices, which have halved over the past twelve months due to an increase in the activity of shale companies in the United States, which dealt a double blow to oil and gas producers in the North Sea.
Michie said urgent action is needed to protect the North Sea’s ability to help meet the UK’s energy needs and invest in low-carbon technologies to help create a carbon-neutral economy in the future.
“We are already working with members of our organization to understand the problems that companies face in these unique and extremely worrying times,” she said.
An OGUK report says the financial crisis, caused by historically low oil prices, would jeopardize jobs in the North Sea, reduce its economic contribution and undermine the country’s energy security.
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