The days of sharp cost reductions in the North Sea oil industry are over, a new report said.
Operating expenditure (Opex) for the region remained steady in 2017, rising by just 2% to £6.9 billion, the UK oil industry’s regulator said.
Unit operating cost per barrel of oil (UOC) was also relatively flat at £11.6bn 2017, indicating a period of stability, according to the Oil and Gas Authority (OGA).
Total operating costs are 28% lower than in 2014.
Opex is defined as the costs incurred running and maintaining offshore infrastructure.
UOC is calculated by dividing operating costs by the number of barrels produced during the same period.
The regulator said the stabilisation of UOC was encouraging at a time when the oil price is rallying and operating costs may have also been expected to increase
OGA strategy director Hedvig Ljungerud said the report’s findings reflected the significant progress industry has made towards sustaining efficiencies and the operational cost base in the UKCS.
Ms Ljungerud said: “Looking to the future, production is expected to rise in 2018 with new fields coming onstream.
“This analysis allows us to monitor closely the performance of each asset and operator and benchmark them to help drive improvement.
“With the significant upturn in the oil price it’s vitally important that industry does not revert back to inefficiencies or cost inflation.”