The Fading Beauty of the North Sea

by Geir Kaasen, Senior Financial Analyst, Orkla Securities

During the last year total exploration & spending activity dropped 24% last year to approx. USD 65 bill. The North Sea sector was one of the regions that suffered most with a 35% drop from 1998. Despite the fact that we expect global E&P spending to grow by 11% this year and 12% next year, North Sea activity is only expected to show little growth in 2001 (+6%) and remain flat this year. The reason is that most of the oil companies are spending allocated funds on Brazil, West Africa and US Gulf region – leaving North Sea as a large, but not a preferred, area. This has lead to lower activity, utilization and dayrates for many offshore segments both in the Norwegian and the UK sector of the North Sea.

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