UK oil production is expected to recover in the coming months as new technology ...

UK oil production is expected to recover in the coming months as new technology takes effect, reversing the current falls in output, reports the latest Royal Bank of Scotland Oil and Gas Index. Oil output in November 2001 showed a small fall on month earlier levels, and was 6.9% lower than in November 2000. The fall in production combined with the decline in the oil price over the last year to reduce oil revenues by 46.9% compared with year earlier levels. However, gas output experienced its seasonal surge, increasing 34.1% compared with October, and gas production was 2.8% higher than in November 2000. Combined oil and gas revenues increased by 6% on October 2001’s figure and were 37.6% lower than a year before. Tony Wood, Senior Economist at the Bank said: ‘We continue to expect oil output to increase over the coming quarters. In particular technology is allowing recovery rates to be increased and previously non-viable reserves to be tapped. The recent award of licences to Tuscan Energy and Acorn to reopen the Argyll field demonstrates the opportunities provided by new technologies in mature provinces such as the North Sea.’ ‘Weakness in the oil price continues to be of concern for the industry,’ he commented. ‘The cuts in output announced by Opec and non-Opec exporters on 28 December have helped to sustain the oil price. However, key to any sustainable increase in the price of oil over the coming months will be recovery in the world economy.’