Oil prices remain stable but no new investment
Expert: Unpredictable longer term outlook blocking new projects
One of the banking world’s leading oil and gas experts had mixed news to deliver for the North Sea on a flying visit to Aberdeen.
Michael Cohen, the New York-based head of energy markets research at Barclays, said oil prices were likely to be in the $70-80 per barrel range for “quite some time”.
He said he expected this
“We don’t see any rebound in production growth”
“stability” to help sustain the sector’s recovery – and north-east economic prospects – after the damaging slump in oil prices from late 2014.
But the longer term outlook is less certain, not least because of a dearth of exploration drilling in the seas off Scotland, he warned.
Mr Cohen said international political tensions had the potential to “move oil prices out of their equilibrium”. But weak global economic growth, supply disruptions in Venezuela and Iran, and a Saudi government intent on not rocking the boat with US policymakers mean there is unlikely to be a “sea change” for oil prices anytime soon, he added.
While current oil price stability is helping to support existing North Sea projects, an unpredictable longer term outlook is blocking fresh investment, particularly in exploration, he said.
“We don’t see any rebound in production growth in the UK beyond 2010 because of the lack of new projects,” he said, adding major producers were likely to “become more agile” with their spending.
Operators need “at least another year” of $70-80 oil to change their cautious outlook and direct cash towards anything more than “smaller-scale” projects, such as tie-backs and redevelopments, he said. debt of £1.5 billion at the end of June.
EnQuest said: “There was very significant interest in the farm-out process for Kraken and we received a number of offers from industry participants and financial institutions.
“The financing agreement with Oz Management was selected as the preferred economic option for EnQuest at this time, allowing us to retain significant exposure to the upside potential on Kraken.”
Meanwhile, EnQuest announced the first shipto-ship transfer of crude oil in three years had been carried out at Port of Sullom Voe, Shetland.
A total of 500,000 barrels of crude from Kraken was transferred.
MIXED NEWS: Oil and gas expert at Barclays Michael Cohen expects stability in the sector for ‘quite some time’