UK oil deals, drilling rise bode well for output

Thu Oct 25, 2012 11:31am EDT
 
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* UK awards record North Sea licences

* Talisman to invest $2.6 billion in UK oil platform

* UK trade group sees output decline slowing

By Alex Lawler

LONDON, Oct 25 (Reuters) - Britain's North Sea oil and gas industry, in decline for years, is enjoying a rise in deals, drilling and investment because of tax breaks and high oil prices, boding well for a slowdown in the rate of the fall in output.

Britain on Thursday awarded one of its highest ever number of licences to drill oil and gas wells offshore, and Royal Dutch Shell agreed to buy a package of North Sea assets from Hess Corp for $525 million.

A day earlier, Canada's Talisman Energy said it would invest 1.6 billion pounds ($2.6 billion) in one of its oldest UK North Sea oil platforms, confirming a statement it made in September.

The developments follow tax breaks earlier this year that have provided an incentive for companies to look more favourably at the North Sea. Oil prices well above $100 a barrel - an unthinkable price level just a decade ago - are also helping.

"Lots has been going on to ensure the UK Continental Shelf is attractive to investors," said Sally Hatch, a spokeswoman for Oil and Gas UK, a trade group.   Continued...