UK oil output down 10%

OIL production in the UK dropped by 10% last year, one of the biggest falls seen among oil producers.

The UK pumped out 228,000 fewer barrels of oil from the North Sea and the UK became a net importer of oil for the first time in 13 years.

New figures from BP show that only Austrlaia saw a bigger fall in the rate of oil production ? 13.9%. According to analysts, mature fields in the North Sea came online thanks to the application of high-tech exploration and production techniques. As a result, the downturn when fields start to decline is all the faster.

Paul Horsnell, head of energy research at Barclays Capital, explained: 'These mature fields (in the North sea) are where technology created a success story, technology kept output up through the 90s at a higher plateau level than was expected and for longer than was expected.

'But the kind of downside to that is that as a consequence of technology having kept things (going) much longer than was anticipated, once they started to decline they've been declining much quicker.'

The data from the BP Statistical Review of World Energy showed the number of barrels produced per day by the UK fell from 2,257,000 in 2003 to 2,029,000 in 2004. The release of the figures comes as the Government announced it was offering a £40m funding package to develop a plan to capture and store carbon dioxide from power plants in depleted North Sea oil and gas fields.

The so-called carbon capture and storage could be in operation within a decade and could become a valuable new export opportunity, said energy minister Malcolm Wicks.

Horsnell said that there were 'no' significant new oil fields to come on. He added: 'There are some, but nothing particularly dramatic, and the net result is you're just managing the process of decline. That's general throughout non-Opec countries that mature areas are declining perhaps a bit quicker than we thought they would.'

Opec is expected to raise output when it meets in Vienna on Wednesday. The organisation is believed to be planning a rise in output to 500,000 barrels a day, taking production levels to 28m barrels.

Saudi Arabia's oil minister Ali Al-Naimi has warned in the last few days, however, that the problem of oil shortages reflects a shortage of refining capacity in oil-consuming countries.