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$500m UK North Sea oil investment indicates continuing strength


The continuing appeal of the UK’s offshore oil fields was once again underlined this past week after Siccar Point Energy received a significant $500m investment.

Blackstone and Blue Water Energy are providing the joint figure and Siccar, a relatively new company, are planning to make use of the funds to build steadily.

Jonathan Roger, Chief Executive of Siccar Point, suggested that the company would look to purchase marginal or mature oil fields.

“We will acquire assets that will....get 100% of our focus, whereas for others they are the tail-end of the business, so they struggle to compete for resources and manpower,” he said.

North Sea oil investment

The news offers a further boost surrounding oil and gas production generally, a hotly disputed topic with the Scottish independence referendum now just around the corner.

A total of £14.4bn was invested in the UK North Sea last year, with this latest investment suggesting that 2014 is comfortably on track to match those grand figures. When the equations are on this type of scale, it is not difficult to see why the oil and gas production are set to have such an important bearing on the upcoming referendum.

It is also worth noting that this particular example is not the first time that private equity investment has been seen in the North Sea, and the referendum might potentially spark a radical change in the way in which companies choose to invest within the region going forward.

Mr Roger emphasised the enthusiasm which is currently surrounding the region. “This is one of the most opportune times to buy assets in the North Sea. The market is very buoyant,” he suggested.

It is open to debate how much this buoyancy will be affected by the upcoming referendum. However, if an investment of this scale is anything to go by, the North Sea looks set to continue thriving regardless of what the immediate future holds.

Production falls, prices rise

This news followed a report by The Economist in March who calculated that production in the North Sea has fallen by an average 6% every year between 1999 and 2010. Since then, it has nearly dived by 40%.


As well as production falling, the costs to extract a barrel are increasing according to the same report. It is now 5 times more expensive to extract a barrel of North Sea oil than it was in 2002. 

Indeed it was Oil & Gas UK's Malcolm Webb that suggested in February this year that exploration is facing its biggest challenge in 50 years. The news from Blackstone and Blue Water Energy will certainly do a lot to ease those industry fears.

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Photo Credit: Snapper, The Economist


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