Data from the UK Department for Energy and Climate Change shows that North Sea oil and gas production rose last year – the first increase since 1999. Oil production was 13.4 per cent higher and natural gas production was 7.8 per cent higher than in 2014.
The additional production came at a time when domestic energy consumption fell, so that exports rose by 8.3 per cent and the UK’s net import dependency fell back from 46.2 per cent to 38.6 per cent.
Unfortunately, the production boost comes at a time when the global glut of oil and gas has caused prices to fall well below the cost of production. Even the most optimistic estimates suggest an oil price of $50 per barrel is required for existing North Sea production to break even. As a consequence, the additional oil exported will have done little to help balance the UK’s record current account (balance of payments) deficit.