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"It's A Huge Crisis" - The UK Oil Industry Is "Close To Collapse"
It seems like only yesterday when back on October 11, we first explained - and previewed - the collapse of oil courtesy of the secret deal between the US and Saudi Arabia. However, it seems like only this morning when we subsequently wrote that "If The Oil Plunge Continues, "Now May Be A Time To Panic" For US Shale Companies." In retrospect, it was, and with the price of crude far below mid-October levels, the pain for both Russia and shale is now quite unbearable (even as Saudi Arabia explained earlier today that the reason for collapsing oil has nothing to do with supply and everything to do with plunging demand, and after seeing this chart we believe it).
All of this was perfectly obvious months ago to anyone who cared. To wit:
... while we understand if Saudi Arabia is employing a dumping strategy to punish the Kremlin as per the "deal" with Obama's White House, very soon there will be a very vocal, very insolvent and very domestic shale community demanding answers from the Obama administration, as once again the "costs" meant to punish Russia end up crippling the only truly viable industry under the current presidency.
So with great delight we present the latest blowback from Obama's "brilliant" strategy to cripple Putin: in addition to the default wave about to crush America's own shale industry, America's biggest foreign ally and military partner when it comes to "ideologically pure missions of liberation" - the UK, and specifically its North Sea oil industry which according to the BBC is in a "crisis" and according to Robin Allan, chairman of the independent explorers' association Brindex, the industry was "close to collapse".

The story is the same as in the shale patch, only in the far colder and stormier North Sea: "Almost no new projects in the North Sea are profitable with oil below $60 a barrel, he claims. 'Everyone is retreating'"
"It's almost impossible to make money at these oil prices", Mr Allan, who is a director of Premier Oil in addition to chairing Brindex, told the BBC. "It's a huge crisis. This has happened before, and the industry adapts, but the adaptation is one of slashing people, slashing projects and reducing costs wherever possible, and that's painful for our staff, painful for companies and painful for the country."
"It's close to collapse. In terms of new investments - there will be none, everyone is retreating, people are being laid off at most companies this week and in the coming weeks. Budgets for 2015 are being cut by everyone."
And to think it was just yesterday that the WSJ telling anyone who believes propaganda that "Christmas has come early for British consumers.
Tumbling oil prices, rising wages and declining borrowing costs are lifting households’ spending power, sending a powerful signal that consumers are set to keep Britain’s economy growing in the New Year.
BOE officials in December concluded the decline in the oil price in particular should act as a mini-stimulus for the U.K. and its major trading partners, even as Russia and other energy producers reel from crude’s recent slide. The BOE estimates the oil price has fallen 35% in sterling terms since June.
Which once again shows that when it comes to being utterly clueless about the real world, central bankers truly have no peers. Well, side from their media cheerleaders of course.
But hold on: wasn't only Putin supposed to be getting crushed as a result of the oil collapse? Suddenly the "secret" Saudi agreement isn't looking all that hot.
As for the truly "best" news: the collapse in the oil field will remain hidden from official government data. Mr Allan said many of the job cuts across the industry would not have been publicly announced. Oil workers are often employed as contractors, which are easier for employers to cut.
His remarks echo comments made by the veteran oil man and government adviser Sir Ian Wood, who last week predicted a wave of job losses in the North Sea over the next 18 months.
BOE bullshit aside, this is what is really going to happen:
The US-based oil giant ConocoPhillips is cutting 230 out of 1,650 jobs in the UK. This month it announced a 20% reduction in its worldwide capital expenditure budget, in response to falling oil prices.
Other big oil firms are expected to make similar cuts to their drilling and exploration budgets. Research from the investment bank Goldman Sachs predicted that they would need to cut capital expenditure by 30% to restore their profitability at current prices.
Service providers to the industry have also been hit. Texas-based oilfield services company Schlumberger cut back its UK-based fleet of geological survey ships in December, taking an $800m loss and cutting an unspecified number of jobs.
On Wednesday Aberdeen-based Wood Group announced a pay freeze for staff, and cut rates for its contractors.
Apache, one of the North Sea's biggest producers, has followed suit and will impose a 10 percent reduction on its contractors' wages from January 1st.
So what happens to the UK oil and energy industry? "The industry was hoping to see continued high levels of investment, stemming the inevitable decline of production as North Sea's resources are used up. But falling oil prices have put that in doubt."
However, the Department of Energy and Climate Change said: "The recent sharp reductions in oil prices are very challenging for companies active in the North Sea. We have seen very little evidence of new projects being cancelled or deferred in reaction to lower oil prices."
Which means the real pain is only just starting, first in the UK and soon everywhere else.
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You would never have known this fact from watching yesterday's BBC Daily Politics programme. The usual suspects, including Andrew Neill and a former UK Ambassador to Russia, gleefully discussed the demise of the ruble, and the potential downfall of Putin. No mention was made of the effects on US or UK energy sectors.
The UK mainstream media has become a propagandist joke. The globalists are becoming desperate however, as the tide of public opinion turns against them. Despite the ramping up of the war rhetoric, I believe the banksters are slowly being cornered, and their days are numbered.
" I believe the banksters are slowly being cornered, and their days are numbered."
I worry about them being cornered, that they might resort to hitting Big Buttons and such. Better would be to just drive them into the sea (where there aren't any corners).
This was the lie spun during the Scotland vote for independence. UK (Cameron) hoodwinked the public with alligator tears. We told you to bolt, live with your naive voting decision.
These same metaphorical tears were shed twice to elect our communist in chief - 'a sucker born every minute'
I believe that Barcalys has the biggest Oil derivative book in the UK and probally the biggest Oil company Loan book...that must be ringing a few alarm bells there, and at the treasury.....
they'll just get mexicans to work the shale fields.
The US can really pull through this, seriously. Who would've thought mexicans were the key to maintaining the status quo here in the US?
IF YOU LIKE YOUR SERVITUDE, YOU CAN KEEP YOUR SERVITUDE
I'd say cheap oil is here to stay if it wasn't because 55$/barrel is not cheap at all. In fact, we are still at an all time high (except for the 79' to 85' period) and that's counting inflation-adjusted prices.
"The UK Oil Industry Is "Close To Collapse".... Close enough for Government work, lets give the wankers the benefit of the doubt its not easy destroying so much so fast.
Haha, $55 here to stay... WTF? If cheap oil is here to stay that means the oil companies/Cartel have been screwing the consumers of oil for years with $100 a barrel oil. So all of the sudden now big oil has found religion, they are going to pass the savings on to the consumer so we can all live happily ever after... SWEET!
"the oil companies/Cartel have been screwing the consumers of oil for years with $100 a barrel oil"
I missed the gun being held to my head to buy at that price.
The oil companies are caught in the Big Trap just like all of us, even the bankers! In no fucking way are we going to get out of this mess basing it on what has created it all in the first place: basing our entire functioning on the improbable premise that there can be perpetual growth.
.... I guess if oil is was not an input cost to just about every product and service in the world you would be correct SEER.
Again, we did this to ourselves.
I'm really getting tired of everyone running around blaming everyone else for fucking everything. When you feel like whining stop and realize that 2/3 of the world's population lives on $3/day or less.
Yeah, thanks for providing the proper perspective here. We should also realize that our debt loads are MUCH greater now than back in that era. Any way that you look at it it doesn't appear that there's any up-side to be found anytime soon (if ever).
first: MSM says we have a good economy a recovery..oil price collapse I guess just means this recovery (no jobs bs wall st numbers) is different this time..(gotta be real dumb to swallow that)..MSM is happy swallowing and is paid well to do so.
second: never had this rapid a price decline in oil that I can remember (markets are not fixed so it must be reflection of demand or over production which is the same as no demand) ..how much oil have nations put in storage SPR numbers are unk gosh china & japan really didn't need oil afterall - worlds largest importer along with Japan) Abe in Japan just got a boner.
third: small EP co's will go under and buffet & majors will get fatter for it Saudi's remove compitition..scoop em up cheap with $$ from fed-
4.Russia is inept and has no moves except to watch it's economy flat line..well no Iran proxy state for putin is near some very easy targets across a small waterway, expect accidents in hormuz very soon.
5. if 4 is correct that russia will turn mean and expose the saudi oil industry as very vulnerable..perhaps the sell off will correct to the up side very quickly..invest accordingly.
6. long term low oil prices..sure sure go ahead and short oil and big producers ..LOL
Nice list.
Regarding #6, it got me to wondering how much shorting can really happen when everyone is basically broke. Seems all the bears (well, they're still working on The Big Bear- Russia) have been wrung clean.
December UK energy trends publication out this morning….. covering q 3…
Imports of electricity (mainly from stagnant nuclear France) at record 21st century highs at 7% of total.
LNG imports up 125 % relative to Q3 2013.
The UK and Japan are the primary customers for Qatar LNG – if Japan goes into recession that means the UK can buy more of the stuff.
Given the precarious nature of the UK’s import reliance its in the national interest to promote European and global depression using their banking gunboats as their primary tool.
The UK is dead-ass broke just like everyone else.
I'd said it years ago: small island nations that have to import energy are FUCKED. (only recourse is to REDUCE the dependency)
"Given the precarious nature of the UK’s import reliance its in the national interest to promote European and global depression using their banking gunboats as their primary tool."
So, the UK doesn't need to export to the globally-depressed world? How are the soon-to-be additional unemployed lot (oil sector) afford to buy that "cheaper" energy?
Tinker to Evers to Chance.
"Forget it, Jake. It's Whack-a-Mole."
There will be hunnerts of millions of beneficiaries of lower oil prices. And likely that many who will gnash their teeth.
Hit one, the other pops up.
Net Gain? 0
Net Loss? 0
Short-term perhaps, but long-term the guaranteed trend is an erosion of margins as economies of scale hit permanent reversal (a "peak" is a peak; when we hit top there's nowhere left to go except down).
Nothing is permanent
upstream costs at well pb are $51 http://www.eia.gov/tools/faqs/faq.cfm?id=367&t=6
w/o transport w/o refinery
so UK and Norway are going to shrink the production and certainly avoid new drilling.
in 6 months we can expect the price to be cak at $100 pb
Low oil prices hurt, but the real disaster is the UK tax regime for offshore producers. The UK is killing their own golden goose. http://gulfcoastcommentary.blogspot.com/2014/07/how-uk-socialists-kill-t...
Low oil prices hurt, but the real disaster is the UK tax regime for offshore producers. The UK is killing their own golden goose. http://gulfcoastcommentary.blogspot.com/2014/07/how-uk-socialists-kill-t...
U.S. diplomacy gone awry? The "Not so secret" secret deal with the Saudis is hurting everyone...
http://www.globaldeflationnews.com/has-the-u-s-secret-deal-with-saudi-ar...
BP political incompetence more than anything
Zion owns the oil companies, and they will do Zions' bidding. Pretending his is not true clouds any accurate interpretation of events unfolding. They've doubled down, trying to break Russia by tanking oil. The existence of their favorite fiat instrument, and the germ of all that is wrong with Amerika, is threatened. When we take the jews down in Amerika, we can begin to rebuild, and forge our own foreign policy, without the diktats of the Rot-childs and the Bushes. But the American on whom this would depend are missing in action - for whatever reason. Therefore the best that can be hoped for, overall, is chaos - useless death and destruction. And for the most part, you people deserve it.