Oil Updates — Crude edges up; UK oil and gas sector faces $24 billion bill to plug old wells 

Update Oil Updates — Crude edges up; UK oil and gas sector faces $24 billion bill to plug old wells 
Brent crude futures rose 44 cents, or 0.5 percent, to $87.89 by 0513 GMT. (Shutterstock)
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Updated 22 November 2022

Oil Updates — Crude edges up; UK oil and gas sector faces $24 billion bill to plug old wells 

Oil Updates — Crude edges up; UK oil and gas sector faces $24 billion bill to plug old wells 

RIYADH: Oil rose on Tuesday after top exporter Saudi Arabia said that the Organization of Petroleum Exporting Countries, and its allies, known as OPEC+, was sticking with output cuts and could take further steps to balance the market, outweighing global recession worries and concern about China’s rising COVID-19 case numbers.

Saudi Arabian Energy Minister Prince Abdulaziz bin Salman on Monday was also quoted by Saudi Press Agency as denying a Wall Street Journal report that said OPEC was considering boosting output and sent prices plunging by more than 5 percent.

Brent crude rose $1.12, or 1.28 percent, to $88.57 at 3.40 p.m Saudi time. US West Texas Intermediate crude was up 98 cents, or 1.22 percent, at $81.02.

UK oil and gas sector faces $24 billion bill to plug old wells: report 

British North Sea oil and gas producers will spend around 20 billion pounds ($24 billion) on dismantling over 2,000 unused wells and facilities in the aging basin over the next decade, an industry group said on Tuesday. 

The cost burden for plugging wells and removing platforms, in what is known as decommissioning, is set to rise sharply over the next three to four years as more fields stop production, Offshore Energies UK warned in a report. 

The growing bill coincides with British Finance Minister Jeremy Hunt’s decision last week to increase a windfall tax on North Sea producers to 35 percent from 25 percent, bringing total taxes on the sector to 75 percent, among the highest in the world. 

OEUK estimates around 2,100 North Sea wells will be decommissioned over the next decade at an average cost of 7.8 million pounds per well, for a total of 19.7 billion pounds. 

The proportion of spending on decommissioning in companies’ budgets is set to rise from 14 percent in 2022 to 19 percent by 2031. 

Over 75 percent of total decommissioning spend will be within the central and northern North Sea. 

Oil and gas production in the North Sea, a major deep-water production hub since the 1970s, has been in steady decline since peaking at around 4.4 million barrels of oil equivalent per day in the 1990s. 

Decommissioning costs can be offset against some taxes, but not against the latest windfall tax. 

OEUK also warned the growing number of oil and gas workers turning to the fast-growing offshore wind industry in the region could create shortages of skilled workers for decommissioning. 

Yemen’s Houthis attack Al-Dhabba oil terminal, force ship to leave 

Yemen’s Houthis attacked the Al-Dhabba oil terminal in Hadhramaut province on Monday, the group and Yemen’s internationally recognized government said. 

The Iran-aligned Houthis fired a projectile from a drone that landed at the entrance of the terminal, which is located in the town of Al-Shihr, two workers at the terminal told Reuters. 

Panamanian-flagged vessel Pratika had entered the terminal to load a shipment of crude but left after the attack, the workers said. 

The Maritime Trade Operations, which is part of the British Royal Navy, said it received a report that a missile or rocket attack had been carried out at Al-Shihr against a single-point mooring at 1212 GMT. All crew and the vessel were safe, UKMTO said, withholding the ship’s name. 

The Houthis’ military spokesman said a ship was forced to leave the port at Al-Dhabba. 

Refinitiv data showed Pratika in the Gulf of Aden at 1952 GMT, headed for Suez. 

Petrofac CEO Iskander to step down in March 2023

Oilfield services provider Petrofac Ltd. said on Tuesday that Sami Iskander would step down as CEO at the end of March 2023, and be replaced by Tareq Kawash.

Iskander took over the top job at Petrofac in 2020.

“Having overseen the resolution of the SFO’s (Serious Fraud Office’s) historic investigation and led a comprehensive refinancing program, Sami has reshaped the business and put it firmly on a path to growth,” Chairman Rene Medori said in a statement.

Kawash will take over as CEO on April 1.

(With input from Reuters)