Oil production falling fastest in Britain's North Sea
By Philip Thornton, Economics Correspondent
Britain suffered the steepest fall in oil production of any country last year, according to a report yesterday that will fuel fears of an end of the era of North Sea oil revenues.
BP, the global oil giant, said North Sea production fell by 10 per cent last year. The drop of 230,000 barrels a day was the biggest fall of any oil producing nation.
Its annual statistical survey also showed that the UK became a net importer of gas for the first time last year. Last year government figures showed the UK had fallen into an oil deficit for two months in the autumn for the first time since 1991.
Kjell Aleklett, the president of the Association for the Study of Peak Oil, said the UK Government's forecasts showed oil production falling one-third from its peak by 2020. "The UK produced most of its oil when it was cheap and they sold it for cheap money," he said. "Now they need to buy it back at more than twice the price they sold it at."
He said the running down of oil would present the Government with problems for its current account - the difference between money coming in and going out of the economy - and for its future economic performance.
"Such a dramatic change in the economy makes it hard to balance things. When the oil industry went up it forced money away from other sectors, but when it goes down there's nothing to compensate for it," Mr Aleklett said. He added that the reversal of the UK's surplus on gas was a "price to be paid" for the so-called "dash for gas" during the Eighties miners' strike when the Government switched to gas from coal for electricity generation.
The Department of Trade and Industry dismissed the concerns over oil running out, pointing to its own figures yesterday showing applications for new North Sea oil and gas licences. Malcolm Wicks, the Energy minister, said firms were applying for a record 279 blocks, the largest number applied for since 1972.He said it was "a solid vote of confidence from the industry in the potential development of North Sea fields", adding: "The increase in applications ... is a vindication that there are significant development opportunities still available for the right firm."
The UK Offshore Operators Association said there were 28 billion barrels of oil and gas still to recover.
Peter Davies, BP's chief economist, said: "Proved reserves of oil, gas and coal remain more than adequate to meet the world's growing needs in aggregate for the immediately foreseeable future."