Companies will increase production in the North Sea for the first time since 2017 and the outlook for both exploration and investment is ‘looking healthy’, according to research by Wood Mackenzie.
Companies will increase production in the North Sea for the first time since 2017 and the outlook for both exploration and investment is ‘looking healthy’, according to research by Wood Mackenzie.
The energy research consultancy expects production to increase by 5% to six million barrels per day ‘as companies ramp up key fields’. WoodMac said most of the increase will come from big fields that started up in 2019, such as Johan Sverdrup, Mariner and Culzean.
According to Neivan Boroujerdi, WoodMac’s principal analyst for North Sea upstream, the ‘exploration renaissance we witnessed in 2019’ will continue. ‘While elsewhere globally exploration budgets remain suppressed, we expect to see 60 exploration wells in the North Sea which is flat year-on-year and similar to pre-downturn levels,’ Boroujerdi said. ‘Norway will see the most activity, with as many as 40 wells, including up to 10 in the Barents Sea.’
Boroujerdi highlighted that capital investment across the region should total nearly $25 billion, which is roughly in line with last year and that there will be plenty more deals this year after $15 billion worth of assets changed hands in the North Sea in 2019.
‘Private equity-backed companies will now be thinking about exiting. When combined with a continuation of the supermajor sell-off, it means there could be bargains to be had in the UK,’ Boroujerdi said.
He added that the North Sea will be at the forefront of decarbonization this year.
