A leading North Sea oil and gas firm has highlighted the scale of the toll taken on the supply chain in the area amid the fallout from the pandemic.

Neptune Energy said firms that provide support services in the North Sea were hit especially hard by the cuts in spending made last year by oil and gas firms in response to the downturn triggered by the Covid-19 coronavirus.

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“2020 was an exceptionally challenging year for our industry, given the impacts of the Covid-19 pandemic and lower commodity prices, and those within the North Sea’s world-class supply chain have been among those hardest hit,” said Alexandra Thomas, who runs Neptune’s UK business.

The comments are likely to heighten concern about the prospects of the North Sea industry amid huge uncertainty about the outlook for commodity prices.

The price of Brent crude fell to an 18-year low of less than $20 per barrel in April. It has rallied to around $56/bbl on the back of hopes that effective coronavirus vaccines will be made widely available in coming months and moved by major exporters led by Saudi Arabia to support the market.

However, Brent is still selling for around 20 per cent less than it fetched in January last year.

The fall in the price will make it harder for North Sea projects that could generate work for the supply chain to win approval.

The North Sea is seen as a relatively expensive are in which to operate. It faces intense competition for investment from other basins around the world.

Neptune Energy moved into the North Sea after winning backing from private equity investors for a growth push launched amid the last downturn.

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In 2017 it acquired a big portfolio of assets from French utility Engie, which included a stake in the giant Cygnus gas field in the North Sea.

Neptune said yesterday that it had awarded contract worth $6.5m in total to Oceaneering and Stork to provide services on Cygnus.

Separately, Wood, which has a big North Sea oil services business, has won a $120m contract to work on a refinery in China.

The Aberdeen-based firm said it will provide engineering, procurement and construction services for Sinopec to help expand its refinery development in the Hainan Free Trade Zone in South China.

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Led by chief executive Robin Watson, Wood has moved to reduce its reliance on the upstream oil and gas production business in recent years.