Survey: UK 2012 oil and gas capital spend to hit record

LONDON: Investment in UK oil and gas production is expected to increase by 35% this year but output will remain roughly the same, industry body Oil & Gas UK said.

Capital spending is expected to reach a record high of £11.5bil this year, up from the previous peak of £8.5bil spent to bring new reserves into production in 2011, a survey by Oil & Gas UK shows.

But the body said the rise in UK oil and gas production would be marginal, increasing by 50,000 barrels of oil and gas equivalent per day (boepd) to 1.85 million, as declining reserves make output more difficult.

In 2011, oil and gas output fell 18% to 1.8 million boepd, the biggest fall on record, and the organisation expects a “depressed” profile over the next five years.

“It would be a mistake to take the current major project activity as a sign of long-term confidence across the industry,” Oil & Gas UK's chief executive Malcolm Webb said.

Webb and the UK oil and gas industry have been critical of an increase in government's supplementary tax on North Sea oil producers, which rose to 32% from 20% last year.

The windfall tax has fuelled fears long-term investment will drop at the worst possible moment, just as it becomes harder to extract dwindling oil from reserves buried deep under the sea. - Reuters

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