UK DATA: Upstream oil output slumps 7% in Q1 on COVID-19, technical issues

London — UK oil production slumped by almost 7% on the year to 1.103 million b/d in the first quarter, official data showed Thursday, likely due to COVID-19 disruption as well as technical issues.

The Q1 data from the Department for Business, Energy and Industrial Strategy (BEIS) showed crude oil production was down 6% on the year at 1.01 million b/d, while natural gas liquids output fell 14% to 93,000 b/d.

In March, the UK oil and gas industry moved to a minimal staffing regime at offshore facilities to protect workers' health, likely resulting in operators moderating production levels, although activity levels are now thought to be increasing.

BEIS also noted technical issues at the Mossmorran NGL processing plant at Fife had disrupted NGL output.

Disruption in the North Sea oil industry is likely to have continued into the current quarter, although output may be supported by the cancellation of swaths of summer maintenance, both for health and cost-cutting reasons. The industry has also gradually adopted new testing regimes and work protocols to enable higher staffing levels.

The International Energy Agency this month forecast UK oil output would fall by 30,000 b/d this year, with the recent crash in oil prices likely to have a longer-term impact on production levels due to reduced investment in new production projects.

Oil trade

BEIS also highlighted a sharp drop in UK crude exports during the quarter as demand fell back in Asia and domestic refiners took advantage of low prices to scoop up North Sea production.

The majority of UK oil output is usually exported, with producers finding higher prices in Asia for grades such as Forties, generally the largest component in the Dated Brent benchmark.

UK consumption of indigenously produced crude and NGLs jumped by 37% on the year to 2.74 million mt, while total feedstock intake by UK refineries fell 6% to 14.21 million mt, BEIS said.

Note: units converted from metric tons at 7.55 barrels/mt for crude, 11.5 barrels/mt for NGLs.