OGA report shows days of sharp cost cutting over

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.

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