Oil & Gas Markets
Deferred P&A could add billions to UK decom costs
Analysis by Westwood Global Energy Group shows that timing uncertainty around decommissioning is driving up financial and operational risks for operators. Political and fiscal uncertainty has impacted investor confidence in the UK, which is accelerating the decline of domestic production. As a result, $26 billion could be spent on decommissioning in the next decade, with well plug and abandonment (P&A) alone accounting for approximately 50% of the cost.
The decommissioning workload is increasing, according to Westwood, but contract awards are lagging, particularly for rigs. Deferring work scopes could strain the supply chain’s limited capacity to execute the work, it said. If delays persist and rig availability tightens, well P&A costs could climb by up to $5.5 billion, due to higher offshore rig dayrates. This would increase financial liabilities for both operators and the UK government, which provides tax relief on decommissioning costs.
“As the UK North Sea enters a new phase where decommissioning becomes the dominant industry driver, the supply chain faces significant demand and major financial risk,” said Yvonne Telford, Research Director at Westwood. “Based on current investment plans, up to 40% of UK fields could cease production before 2030. With the impact of decommissioning tax liabilities on abandonment expenditure, cost-effective P&A must be paramount.”
Wood Mackenzie report: Oil prices likely to be lower in 2025 than last year
Brent crude oil prices are projected to average $73/bbl in 2025, down $7/bbl from 2024, according to Wood Mackenzie’s latest monthly oil market outlook. The $73 forecast is revised down by $0.40 from February.
The outlook is primarily shaped by two factors: OPEC+ production plans and US tariff policies.
“We’re seeing a complex interplay of supply and demand factors,” said Ann-Louise Hittle, Vice President of Oils Research at Wood Mackenzie. “While global demand is expected to increase by 1.1 million barrels per day (bpd) in 2025, non-OPEC production is forecasted to rise by 1.4 million bpd, potentially outpacing demand growth.”
Key points from the forecast include:
- OPEC+ plans to increase production in small monthly increments from April 2025 through September 2026. Postponing this plan would support prices and could offset the impact of additional US tariffs.
- Global economic growth for 2025 is projected at 2.8%, but this could be adjusted down by 0.5% depending on potential trade war scenarios.
- Slower GDP growth could reduce the oil demand increase in 2025 by about 0.4 million bpd.
- The annual average for Brent crude could be $3 to $5 lower per barrel if oil demand growth weakens.
Wood Mackenzie emphasizes that these projections are subject to change based on global economic conditions, tariff and trade policies, and OPEC+ decisions.
“Slower GDP growth would put the demand gain in 2025 about 0.4 million bpd less than the current projection for the year,” Ms Hittle said. “The resulting 0.7 million bpd year-on-year gain would be surpassed to a greater degree by the increase in non-OPEC supply, the majority of which is from conventional projects, so largely independent to oil price. This risk would leave little room for OPEC+ to pursue its plan to bring output back into the market.”
Report: US energy services sector adds 653 jobs in March
In its March 2025 jobs report, the Energy Workforce & Technology Council highlighted continued growth and stability within the US energy services sector.
Total jobs in the sector rose to 640,212 in March, reflecting a gain of 653 positions over February, according to preliminary data from the Bureau of Labor Statistics and analysis by the Energy Workforce & Technology Council.
Nationwide, the US labor market demonstrated unexpected strength in March, with employers adding 228,000 jobs, surpassing economists’ forecasts of 140,000. Despite this growth, the national unemployment rate edged up slightly to 4.2% from 4.1% in February, as more individuals entered the labor force.
