North Sea industry leaders have said the oil and gas supply chain is at breaking point as companies grapple with the devastating fallout from the coronavirus.

Oil and Gas UK said the slump in oil and gas prices triggered by the impact of Covid-19 on demand and the logistical challenges posed by the virus have left many firms facing collapse.

Experts warn: Oil price plunge will mean end for range of North Sea fields

It said the Government needed to provide more help to help firms cope with the disruption caused by the coronavirus or risk seeing many go out of business, with a devastating impact on jobs.

The resulting damage to the sector could pose a threat to the security of energy supply in the UK and the country’s ability to respond to the challenges posed by climate change.

Oil and Gas UK’s sustainability director Mike Tholen said: “This is why we ask Government today to continue to stand by this vital industry and work with us on developing a sector resilience package to get us through this period.

“This will help ensure we can continue to provide secure and affordable energy now and in the future, alongside driving the work needed to achieve net zero emissions.”

North Sea faces 'premature end' as firms slash costs amid mayhem in oil market

OGUK made the call for help on a day when crude prices came under renewed pressure.

The price for West Texas Intermediate grade crude for delivery in May fell into negative territory fore the first time ever amid fears the US will run out of storage capacity. Oil futures plunged below zero in afternoon trading in the US on Monday as the cost to have a barrel of US crude delivered in May plummeted to negative $37.63 per barrel. This meant traders had to pay buyers to take it off their hands. It was roughly $60/bbl at the start of the year.

The Rystad Energy consultancy said there would be continued downward pressure on prices unless exporting nations agreed to make deeper cuts to production. Opec Plus countries committed last weekend to historic output cuts.

Momentous Opec Plus production deal may not lighten gloom in North Sea

The Brent crude price fell below $20 per barrel for the first time in 18 years on Tuesday. 

Brent crude for June delivery sold for $26.65/bbl on Monday afternoon, down $1.43/bbl on the day. Brent sold for $70/bbl in January on a comparable basis.

Oil & Gas UK Is consulting members about what measures should be included in the resilience package.

It said production from the UK Continental Shelf is enough to provide 63% of the UK’s oil and gas needs and 46% of the country’s total energy. Skills developed in the oil and gas industry could be used to develop renewable energy assets.

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