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North Sea oil and gas upstream market is expected to grow at a CAGR of over 3% during the forecast period of 2020-2025. Factor such as the reduction in the offshore drilling cost by 40% is expected to drive the North Sea oil and gas upstream market. However, the increasing usage of renewable to meet energy needs is likely to restrain the North Sea oil and gas upstream market.
- Shallow water segment due to less capital cost of investment than deepwater held a significant market share, in 2019, and is expected to dominate the North Sea oil and gas upstream market.
- A large amount of remaining oil and gas reserves in the region, which are expected to be exploited for several more decades, are expected to create many opportunities for the North Sea oil and gas upstream market in the future.
- The United Kingdom, due to its several upcoming projects, held a significant market share in 2018 and is likely to dominate the North Sea oil and gas upstream market during the forecast period.
Key Market Trends
Shallow Water Segment Expected to See Significant Market Growth
- Shallow water segment due to fewer capital investments and inflated oil prices held a significant market, in 2019. Most oil and gas upstream operations in the North Sea are done by two countries, Norway and the United Kingdom. More than 85% of the oil and gas production in the United Kingdom came from shallow water in the region.
- The United Kingdom oil and gas sector is dominated by production from offshore areas, which account for virtually all of the oil and gas production of the United Kingdom. UKCS (the United Kingdom Continental Shelf) production now comes from more than 300 small fields and others that are much more technically complex to produce. In 2019, more than 40 contracts offshore were distributed by the United Kingdom, most of which are for the activities in the shallow water.
- By the end of 2019, 87 fields were in production in Norway Continental Shelf, and considerable remaining petroleum resources indicate that there will also be a high level of activity on the shelf over the next 50 years. All the oil and gas produced in the country are totally from offshore operations, most of which are in shallow water.
- Therefore, owing to the above points, shallow water segment is likely to dominate the North Sea oil and gas upstream market during the forecast period.
United Kingdom to Dominate the Market
- In 2019, the United Kingdom held a significant share in oil and gas production in the North Sea region as all of the oil and gas produced in the country are from offshore operations. The United Kingdom, in 2018, produced 50.8 million tons of oil, thus contributing approximately 7% of the total oil production in Europe, which was higher than what is produced in 2017, 46.6 million tons of oil.
- In 2019, BP plc completed its Culzean project in the North Sea, and it is expected to produce 200000 barrel oil equivalent per day of hydrocarbon by 2020. Further development in the region is expected to have a positive impact on the North Sea oil and gas upstream market.
- In December 2019, UK Oil and Gas (UKOG) conducted a successful reservoir test on Horse Hill Oilfield in the United Kingdom. After the test company now intends to accelerate the start of up to 25 years of continuous long-term production from the field. The company also planned to drill several directional wells in the region.
- Hence, owing to the above points, the United Kingdom is expected to see significant growth in the North Sea oil and gas upstream market during the forecast period.
The North America oil and gas upstream market is moderately fragmented. Some of key players in this market include Equinor ASA, Exxon Mobil Corporation, Royal Dutch Shell Plc, BP plc, and Total SA.
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