UK oil and gas production fell by 6.4% in January 2002 following December 2001&r ...

UK oil and gas production fell by 6.4% in January 2002 following December 2001’s highs, reports the latest (March) Royal Bank of Scotland Oil and Gas Index. Oil output in January 2002 fell on the month to 2.27mn b/d, but was only marginally down (0.2%) on year earlier levels, states the report. Average daily production in the 12 months to January 2002 was 9.1% lower than in the 12 months to January 2001. Gas output was down in January 2002 and on the year as a whole. Gas production fell by 2.5% to 12.3mn cf/d in January, down on December 2001and 4.5% lower than during January 2001 (13.1mn cf/d). Combined oil and gas revenues decreased by 4.5% on December’s 2001 figure, and January 2002’s output was 2.4% lower than January 2001. Gas production continues to trend upwards, with average daily output 2.2% higher in the 12 months to January 2002 than in the 12 months to January 2001. However, Tony Wood, Senior Economist at the Bank, is bullish about UKCS oil production for the coming year. ‘We expect average production to rise by 5% on the year to 2.27mn b/d. However, this will still be down 6% on 2000’s level of 2.41mn b/d.’ Turning to recent events in the oil markets, he added: ‘Prices have risen to around $25/b as a result of the combined effects of stronger than expected recovery in the US economy and recent events in the Middle East. We believe the potential impact of recent price movements have been overstated and it would require prices to be sustained at a level of over $30/b for a number of months before a detrimental effect would occur.’