Challenging environment for North Sea oil likely to persist, says Mark Carney
Updated : 15:57
The challenging environment for the North Sea oil industry is likely to persist, the governor of the Bank of England said, amid a continued downturn in the price of oil.
The governor said he expected there would be no respite for the oil and gas energy as the plummeting price oil has led to thousands of jobs losses.
Mark Carney told Scotland’s Herald newspaper: “It is difficult. I don’t want to underplay it. It is a challenging environment and, given global prices, that may persist for some time.”
The price of brent crude oil fell to $30 a barrel in January and experienced a high of $115 in the summer of 2014.
On Wednesday afternoon, the price of brent oil rose 1.6% to $46.72 and West Texas intermediate rose 1.5% to $45.36.
He said that the reaction from the North Sea oil industry to the low oil price by cutting jobs and costs was “impressive” and it has put it in “position to move forward”.
“I would say that the reaction of the North Sea oil and gas sector has been impressive. It has been impressive in terms of reductions in costs”.
On Tuesday, a report from Oil & Gas UK, the industry body, said the North Sea industry would sustain a cash deficit of £2.7bn this year, down from £4.2bn in 2015.
It said that the production from British oil and gasfields had increased 10.4% for the first time in 15 years in 2015, in comparison to the previous year, but this was a result of developments in the North Sea from decisions made during the years when oil fetched $100 a barrel. The report stressed that there would be sharp declines unless there was investment.
UK Oil&gas also referenced aTreasury forecast that a downturn in the sector would cost the British taxpayer £1bn in the 2016/17 financial year.
Money from the North Sea is important to the debate over Sottish independence and the ability for Scotland to fund its finances.
For the 2015-16 fiscal year the Scottish government's revenues from the North Sea fell to £60m from £1.8bn the previous year. In 2008-09 revenues were £11.6bn.