UK oil producers say new investment vital even as costs fall

By Angelina Rascouet on 9/27/2016

LONDON (Bloomberg) -- The UK’s offshore oil producers called on the government to expand efforts to secure new investment after exploration sank to an all-time low.

“The UK Continental Shelf is in urgent need of fresh investment to boost exploration and drive activity,” Deirdre Michie, CEO of the industry group Oil & Gas UK, said Tuesday in a report. “Little new investment has been approved in 2016, and 2017 looks no better.”

Oil’s collapse in the past two years has left many producers operating at a loss at aging North Sea fields, where resources are dwindling. While output rose 10% last year and extraction costs have dropped by almost half since 2014, the industry has suffered falling revenues and sweeping job cuts, according to Oil & Gas UK.

“Major challenges remain, with record-low exploration and a lack of capital investment,” the group said. The government must lend its support by providing fiscal certainty and encouraging new entrants, Michie said.

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