Barclay's Oil & Gas: Cautiously Optimistic

Walter Cumming, head of oil and gas, Barclays Corporate, weighs in.

The theme of cautious optimism remains as we move towards the end of the year and all eyes are on the 2012 budget as the industry hopes to see longer-term certainty and clarity in areas such as decommissioning. The North Sea still presents significant investment opportunities. The stable commodity price and the discovery of new plays in the Norwegian and UK sectors have given buyers the confidence to engage in further activity and acquisitions. For banks, the appetite to lend continues to grow, particularly for companies with good business propositions and diverse portfolios.

However many assets are approaching retirement age, and as decommissioning activity on the UK Continental Shelf unavoidably becomes more of an issue, operators and field partners will potentially view this as a growing factor in investment and M&A decisions. We need to avoid situations where decommissioning is the deciding factor for potential purchasers. Technological advances provide increasing opportunities to exploit remaining reserves. It would be disappointing to see decommissioning actioned, or brought forward, on assets that could remain rewarding through more flexible or innovative approaches.

The challenge is to enable decommissioning but ensure and facilitate increased activity in the province, maximising hydrocarbon production and extending the life of the UK Continental Shelf.