RECENT signs that the oil market has stabilised after the weeks of turmoil triggered by the coronavirus have been strong enough to alarm activists but will provide little comfort for firms operating in the North Sea.

After hitting an 18-year low of $15.98 per barrel in April, when prices turned negative in the US, the going rate for a barrel of Brent has risen significantly in relative terms.

Muted oil price recovery in prospect amid signs demand increasing reckons experts

With Brent selling for around $34.50/bbl yesterday afternoon some traders have probably made a lot of money in recent weeks.

The rise has followed signs that demand for crude is increasing as coronavirus lockdowns are eased. Record production cuts agreed by Opec + countries kicked in on May 1.

The upward trend in the price has been strong enough to leave some campaigners worried about the implications for the drive to tackle climate change.

Charlie Kronick, oil finance advisor to Greenpeace, said last week: “Today’s oil market is far from stable and prices are still low but cuts in supply from the ongoing collapse of US shale, plus the rebound in road traffic, show that the economy’s transition out of the oil age needs political coordination. It would be both a tragedy and a farce if we let workers’ livelihoods and our climate be destroyed by the industry’s dead cat bounce.”

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But even as Greenpeace voiced its warning it became clear that sector watchers and participants were taking a very cautious approach, which will have obvious implications for the North Sea.

Rystad Energy warned on Monday the price recovery could easily be derailed if fresh waves of coronavirus cases break out or countries stop complying with production curbs.

The consultancy said any further recovery in prices would likely be slow. It could be a long time before Brent returns to the near $70/bbl it reached in January.

Rystad said a range of North Sea fields could be decommissioned early unless the situation improved faster than expected.

Last week news on the mergers and acquisitions front provided a sign the North Sea faces big challenges attracting the attention of some investors at least.

HiTec Vision announced it had renegotiated the terms of a bumper deal to buy a portfolio of North Sea assets from Total. The private equity business did not give financial details but noted tersely: “Petrogas is no longer part of the transaction.”

The comment suggest there has been a dramatic change in sentiment at Petrogas which is owned by Oman-based MB Holding.

When the deal was announced in July last year, with a £500m price tag, Petrogas chief executive Usama Al Barwani said the North Sea was a heartland for the firm, which had a vision for consolidation and growth in the area.

HiTec Vision said this week the changes agreed to the terms of the deal retained its attractiveness but made no mention of any plans to grow the portfolio.

North Sea heavyweight insists area has potential after £230m deal falls apart

The news from HiTec Vision came a day after Neptune Energy revealed a deal to buy a £230m North Sea portfolio amassed by Italy’s Edison had been scrapped.

Significantly the portfolio includes a stake in the giant Glengorm find made by Total and partners last year, which people had said showed there was still lots to go for in the North Sea.

Neptune may have decided that now is not the time to commit the money and effort that would be required to develop Glengorm.

Then came another indication that experts reckon the outlook for the North Sea is pretty bleak at current prices in the form of an Aberdeen university study. This found if prices remain around $35 per barrel oil equivalent in real terms in coming years around a third of the undeveloped reserves in the North Sea could be left in the ground.

Professor Alex Kemp and Linda Stephen found of 475 projects that could potentially be in line for development on the United Kingdom Continental Shelf only 38 would be likely to win approval.

In the most optimistic oil price scenario, $45/bbl, just 45 fields would get a green light.

The study found spending on the development of North Sea fields and running costs is set to plummet by £10 billion annually.

Mr Kemp said the prospects for the supply chain are grim, with firms that work on the development of fields and exploration likely to face big challenges.

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It will be little consolation that spending on decommissioning could rise rapidly.

The study provided fresh evidence that hopes of a boom West of Shetland appear increasingly unlikely to be fulfilled.

The area generated huge excitement as the industry emerged from the slump triggered by the crude price fall between 2014 and 2016.

Big finds made by the pioneering Hurricane Energy underlined the exploration potential of an area in which there has been much less drilling than in parts of the North Sea closer to the UK mainland.

The success of bumper field developments completed by the likes of Shell and BP West of Shetland followed advances in technology that helped transform the economics of big finds that had been left idle for years.

However, the Aberdeen university study found just five of 45 West of Shetland developments that might be worth considering would be likely to win approval at $35/boe.

Setbacks suffered by Hurricane Energy recently could have given firms more reasons to be wary about committing to the expense involved in operating in the stormy waters off Shetland.

Shares in Hurricane plunged on Friday when the company suspended its production guidance for this year after suffering problems with a well on the flagship Lancaster field, which it brought onstream last year.

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The company is facing complications in its attempt to establish if as much oil could be produced from Lancaster as hoped.

Shares in Hurricane had fallen sharply last year after the company recorded mixed results in a drilling campaign that it hoped would confirm the potential of acreage nearby. Centrica-owned Spirit Energy funded the campaign after buying in to the acreage in 2018.

in the company’s annual report, which was published in April, Hurricane’s chairman Steven McTiernan said: “Given the major impact of the Covid-19 pandemic, all future opportunities are being re-evaluated taking into account much lower oil prices.”

He noted investor interest in the sector had “drastically reduced”.

Fund raising conditions will not have got any easier in recent weeks.

Spirit was put up for sale last year by Centrica, which decided it could do better by selling energy to consumers and businesses than producing oil and gas in the North Sea.

Champions of the West of Shetland area may have taken some consolation from the fact that Shell’s finance chief Jessica Uhl recently underlined the potential of the giant Cambo field, which it has a stake in.

Shell deferred a decision on whether to develop Cambo in April. However, earlier this month Ms Uhl said the Cambo decision was tactical rather than strategic. She indicated the field could be developed if conditions improve.

Infrastructure installed for Cambo could be used to develop other finds in the area.

In February BP’s North Sea boss Ariel Flores said the giant could use the production facilities it has developed West of Shetland to unlock the potential of finds in the area.

The comments came after BP started production from the Alligin find, which it linked to facilities developed for the revamped Schiehallion field.

However, market conditions look very different today than they did in February, when Bernard Looney succeeded Bob Dudley as chief executive of BP.

Mr Looney has signalled oil and gas will become a less important part of BP’s business as the company looks to achieve the ambition he has set for it to become a net-zero operation by 2050.

Glasgow-born oil executive to take charge of BP's North Sea business

On Tuesday BP announced that Glasgow-born Emeka Emembolu will take charge of the North Sea business in July. It may be some time before we learn what the leadership changes will mean for BP’s operations in the wider North Sea.