The chief executive of Total – one of the world’s largest oil companies – has highlighted his optimism about the future of oil and gas production in the North Sea.
“There is a future for the North Sea, no doubt about it,” Patrick Pouyanne said, whilst speaking at an official opening of a new gas plant in Shetland – part of a £3.5 billion scheme to open up gas fields in the deeper waters to the west of the islands.
Total anticipates that the Laggan and Tormore oil fields will supply eight per cent of the UK’s gas needs, delivering energy for two million homes. Prior to February 2016, only oil was recoverable from the area, but now with the pipelines and infrastructure in place, previously accessible energy in gas form can now be reached.
Underlining his optimism, Pouyanne confirmed his company would continue to invest in the UK, but the industry had to be “smart” in terms of discovering ways to maximise its offshore potential.
“We need to be sure that break-even will be able to support highs and downs, and today we are in the downs,” he said, also adding that the cost of operating in the region would need to come down to enable firms to weather the storm of lower oil and gas prices.
“The (oil) price is lower today, but we knew that when we invested there would be ups and downs. Our job is to now make the most out of these assets.”
The UK oil and gas industry made approximately 65,000 job cuts last year and thousands more are expected as investment continues to plummet.
A report by UK Oil & Gas in February estimated that investment in the North Sea would fall to around £1 billion in 2016 – down £7 billion compared to the medium term average.
“The price of oil is never stable, “Pouyanne continued. “We made a mistake in the industry when we were at $100 a barrel. We thought it is a sort of floor. Today people think there is a ceiling. There is no floor, no ceiling, it will move up and down.”
Despite the volatility of oil prices, Poyanne confirmed Total would continue to invest in the North Sea region: “We are still continuing to invest in additional discoveries that will be put on stream in 2017-2018.”