March 23, 2020 / 11:35 AM / 9 days ago

Most North Sea oil output "in the money", but decom bill looms - Woodmac

* First North Sea fields have already been shut

* North Sea operators face huge decommissioning bill

* Halted development spend will lead to stranded assets

LONDON, March 23 (Reuters) - Most North Sea oil and gas fields can make money at $30 a barrel, but stakeholders in the fields that have to be shut in the current price rout are set to face a huge bill for removing facilities like platforms and subsea infrastructure, Wood Mackenzie said.

The North Sea between Britain and Norway, home of the Brent crude stream that underpins global oil prices, is one of the world’s oldest and most expensive oil basins.

Crude oil prices have posted four straight weeks of losses and dropped more than 60% since the start of the year.

Oil and gas producers across the globe are slashing budgets.

Last week, Britain’s oil and gas sector called on the government to help it survive, as the oil price crash triggered the first field shutdowns.

“In the short term, the North Sea can survive. Cost reductions achieved during the last downturn mean 95% of onstream production is ‘in the money’ at $30 a barrel,” said Wood Mackenzie North Sea upstream analyst Neivan Boroujerdi.

“But close to a quarter of fields will run at a loss in this price environment. The major concern here is not volumes. Early shut-ins would accelerate $20 billion in decommissioning spend.”

If oil and gas companies cannot pay for decommissioning, taxpayers may ultimately be liable.

With oil service companies, which provide physical assets, engineering and staffing services to producers, already squeezed since the last oil price slump in 2016, most savings are likely to come from cutting future development, rather than current operations.

“Annual investment in the UK could fall below $1 billion as early as 2024. The threat of stranded assets is real – we estimate nearly 6 billion barrels... could be left in the ground,” Woodmac said. (Reporting by Shadia Nasralla; Editing by Jan Harvey)

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