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Global Oil & Gas Decommissioning Costs to Total USD 42 Billion

Gasoil News - Published on Wed, 27 May 2020

Image Source: Oil Gas Decommissioning
Energy companies have been slashing exploration and production budgets since the Covid-19 pandemic took hold and sent oil prices tumbling, but, with few profitable investment alternatives, operators are now likely to increase spending in decommissioning work. Rystad Energy estimates the total value of the global pool of decommissioning projects that will accumulate through 2024 could reach $42 billion.

With an average asset age of 25 years, the Northwest European decommissioning market could grow 20% in annual commitments through 2022 if the current low oil prices don’t show signs of substantial recovery soon. In addition to a rapidly maturing asset base and low oil prices that erode commercial viability and potential life extensions, the North Sea decommissioning market will also be helped by favorable service contract prices.

Only about 15% of North Sea assets have been decommissioned to date, but in the coming five years we expect an average of 23 assets to cease production annually. The UK is poised to lead the way with nearly 80% of total estimated expenditure on Northwest European decommissioning in the next five years, followed by Norway with 14% and Denmark with 4%. The pool of removal projects in the region for that period is estimated at about $17 billion. By comparison, decommissioning costs in the US for the same period are estimated at $5.7 billion.

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Posted By : Yogender Pancholi on Wed, 27 May 2020
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