Oil prices re­main sta­ble but no new in­vest­ment

Ex­pert: Un­pre­dictable longer term out­look block­ing new projects

The Press and Journal (Aberdeen and Aberdeenshire) - - BUSINESS - BY KEITH FINDLAY

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’

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