CENTRICA has lent weight to fears the oil price slump will be a disaster for the North Sea by raising the prospect it will shelve projects and close some UK fields down early amid deep cuts in spending .
The energy giant, which owns Scottish Gas, said some UK projects are no longer attractive following the sharp fall in crude prices since June while it may not keep some fields in production as long as expected.
Centrica aims to cut £500m off the bill for its global oil and gas exploration and production arm over the next two years.
The company noted the cut backs will apply to its operations in Canada. However, it seems likely they will weigh heavily on Centrica's operations in the UK North Sea, which account for a large part of the company's portfolio.
Centrica became a major player in the UK North Sea through the £1.3 billion takeover of Aberdeen-based Venture production in 2009. The company produces thousands of barrels oil equivalent daily from a range of North Sea fields, including the Trees cluster off eastern Scotland.
Centrica runs its North Sea operations from Aberdeen and employs around 400 people in the city.
The group said it will cut the value of its global oil and gas portolio by £1.2bn.
The announcement makes clear the problems caused by the fall in oil prices are weighing heavily on the North Sea.
Centrica said it had cut the estimate of reserves for a number of UK fields "with updated production flow data as well as the lower price environment making a number of future developments uneconomic and leading to an earlier forecast cessation of production on some assets".
The company has written off some exploration licences acquired with Venture.
The cuts were announced on a day Centrica reduced dividend payouts by 21 per cent after falling energy prices drove profits down by more than a third in 2014.
The new chief executive Iain Conn highlighted the challenges facing the exploration and production business, which he said had seen significant falls in oil and gas prices since December.
Centrica appears to assume conditions will remain tough for some time.
" It is not clear that that the forward price curves for oil and gas will improve in the near term, and we therefore need to plan on the basis that lower wholesale prices will persist for all of 2015 and potentially through 2016 and into 2017," said Mr Conn, who has launched a review of the group's strategy.
Centrica said it was too early to say how the cut backs will impact on the operations run out of Aberdeen.
However, the statement will heighten concern about the outlook for the UK North Sea and related jobs in Scotland.
Last week Bank of America Merrill Lynch said the North Sea was especially vulnerable to the downturn because too much production came from ageing fields that are costly to run.
In December oil services tycoon Sir Ian Wood predicted firms would slash spending in the area and decide to take some fields out of production.
He forecast then that 10 per cent of the jobs in the North Sea could go by next summer amid "pretty harsh" cost cutting across the supply chain.
A series of oil and gas firms have said they will cut jobs in Scotland since Sir Ian issued his warning.
Last month BP said it would cut 300 jobs in Aberdeen. The company went on to slash the value of its North Sea portfolio by around £3.3billion
Centrica said it will reduce capital spending on exploration and production developments by £250 million in 2015 and a further £150 million in 2016. It spent around £1.1bn in 2014.
The company is targeting a 10 per cent, or £100 million reduction in the cost of producing oil and gas from existing assets in 2016, compared to 2014 levels.
Centrica's group adjusted operating profits fell 35 per cent, to £1.75bn, from £2.7bn in 2013. It was also hit by extreme weather patterns in its North America business.
The group cut the full year dividend to 13.5p per share from 17p.
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