Abbot warns of North Sea concerns
Further evidence of the UK’s reliance on oil imports emerged today after rig contractor Abbot Group warned of an uncertain outlook for North Sea production.
Abbot, which operates 20 platforms off the coast of the UK, said the recent fall in North Sea output had been “dramatic” in spite of the rapid rise in oil prices.
It predicted that oil giants would continue to shift investment to other parts of the world, meaning prospects for activity in the North Sea during 2005 were uncertain.
Even though contract extensions of up to three years had been sealed with major clients, Abbot said production from its UK rigs was still likely to fall short of previous levels.
However, the Aberdeen-based group stressed today that it remained fully committed to its operations in the North Sea which were “an important contributor to the group”.
Today’s update follows the news that the UK became a net oil importer for the first time in 13 years in September.
Although this was blamed on one-off factors such as maintenance work to rigs and pipelines, economists have frequently flagged the long-term decline in UK oil exports.
There is less oil in many of the major North Sea fields and UK operators are having to tap sites with smaller reserves.
Abbot said the fall off in UK production at a time of record oil prices justified its strategy of reducing its exposure to the North Sea.
The group, which employs 3,800 staff worldwide, has tackled projects in Central Asia, the Middle East and North Africa. It has expanded operations to Azerbaijan and Iran as well as Siberia and Sakhalin Island in Russia.
Shares in Abbot fell 11% today as investors took a dim view of its assessment of North Sea production, which accompanied an update on recent trading.
Results for the year ending New Year’s Eve were expected to be broadly in line with market hopes, with the group achieving “strong growth” in its operations overseas.
But this achievement would be diluted by the continuing decline in North Sea activity, the weakness of the US dollar and the strength of the euro, Abbot said.
Looking ahead, the company said it expected the price of oil to stay above 30 US dollars a barrel during 2005.
Executive chairman Alasdair Locke said: “The outlook for the group is one of the best for many years.”
