UK economy to take oil hit in 2013 before N.Sea recovery

Sun Feb 24, 2013 7:01pm EST
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* Oil & gas production to fall 3-6 pct in 2013 -Oil & Gas UK

* Industry body survey says output down 14 pct in 2012

* Production seen rising in the period 2014 to 2017

By Sarah Young

LONDON, Feb 25 (Reuters) - Britain's faltering economy will take another hit from declining UK North Sea oil production this year before a mini-recovery takes hold in 2014, removing a handbrake on the country's growth in the medium term.

Waning North Sea oil production has damaged attempts by Britain's coalition government to stimulate growth, weighing on the economy in 2012 and bringing the country close to a "triple-dip" recession.

But after three years of gloom, from 2014 onwards oil production could become a bright spot for the economy, with industry body Oil & Gas UK forecasting a historic pick-up in output, fuelled by a surge in investment.

A rise in production from next year would be the first since 1999, and could aid the UK economy's return to growth, helping the Conservative-led government meet budget targets and bolstering the party's chances of winning a 2015 election.

Before any recovery, however, there will be another dip. Oil and gas production will fall by between 3 and 6 percent this year, predicted the industry group in its annual activity survey published on Monday, on top of a 14 percent decline in 2012.   Continued...