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UK DATA: Upstream oil output plunges 7% to three-year low in 2020

Highlights

UK net exporter of crude/NGLs for first time since 2004

COVID-19 overturns half-decade recovery trend

London — UK oil production dropped 7% to a three-year low of 1.03 million b/d in 2020, while the country was a net exporter of crude and natural gas liquids for the first time since 2004, statistics from the Department for Business, Energy & Industrial Strategy, or BEIS, showed on Feb. 25.

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The sharp drop in output has been attributed by the industry to restrictions on offshore activity due to COVID-19, although postponement of maintenance particularly in the first half may have supported production levels, before operators moved to catch up on essential activity in the third quarter.

Within the overall figure, crude oil production was down 8% at 929,000 b/d, with the remaining 96,000 b/d being NGLs. Output plunged particularly steeply in the third quarter, down 12% on the year, before picking up in the fourth quarter.

In some cases, production may have been reduced in response to the plunge in the oil prices operators could hope to attract, with US producer Apache saying it held back production for this reason.

UK oil output was last lower in 2017, when it hit 1 million b/d, having mostly been on a recovery trend over the last half-decade.

BEIS noted last year's steep drop in domestic oil consumption sharply reduced throughput at UK refineries, although the drop in prices also caused refiners to favor domestically produced crude.

"Imports of crude reached record lows, down 18% on 2019, as refiners slowed production in line with demand and plummeting markets favored indigenous receipts," it said. "Whilst exports were also down, these exceeded imports, making the UK a net exporter of primary oils for the first time since 2004. Imports of process oils fell by more than half as refiners favored crude while prices were low."

The UK accounts for about a third of the oil produced in Western Europe, with Norway producing double the level, and currently on an upward trend thanks to the giant Johan Sverdrup field, which came on stream in 2019. The region is home to S&P Global Platts' Dated Brent benchmark, used in the oil trade around the world.

Note: BEIS statistics converted at a rate of 7.55 barrels/metric ton for crude and 11.5b/mt for natural gas liquids.