North Sea Oil Output to Hit 8-month High in February

From Reuters

By Alex Lawler

North Sea oil output from 12 production streams is set to rise by 18 percent in February due to strong supply from the UK’s largest oilfield, which may weaken a source of support for Brent oil prices.

Output will average 2.06 million barrels per day (bpd), based on the latest revisions to loading schedules compiled by Reuters on Tuesday, up from 1.75 million bpd in January.

The increase is partly a result of the return to a stable rate of output from Nexen’s Buzzard oilfield, the largest of the fields contributing to the Forties crude blend, following prolonged maintenance in 2012.

“It’s very promising,” said an industry source familiar with Buzzard production. “Hopefully it will last.”

Output changes from the North Sea can have a significant impact on world prices because the region is home to the dated Brent benchmark, used to price much of the world’s physical oil and part of the underlying market for Brent futures.

February’s total is set to be the highest since June 2012, according to monthly schedules tracked by Reuters, when output was 2.11 million bpd.

Loading programmes are usually issued between the 5th and 10th of each month. Reuters attempts to track significant revisions based on actual production levels.

Supply of the Ekofisk, Brent and Flotta crudes will also be higher in February, partly because delayed January shipments will be loaded in the following month. The shorter month is also increasing the daily loading rate in February.

Ekofisk loadings are estimated at 278,000 bpd in February, up from about 194,000 bpd in January, because three cargoes were deferred from January’s programme because of maintenance in the middle of January.

Brent supply will be higher in February because a shutdown of the Brent pipeline system after an oil leak was found in an offshore platform cut output in January and led to a cargo being delayed into February, trade sources said.

And Flotta, the smallest stream tracked by Reuters, will load two cargoes in February. A shipment originally scheduled to be exported this month was delayed.

Four North Sea crudes underpin Brent prices – Brent, Forties, Oseberg and Ekofisk, known as BFOE. Forties is the most important of these because it usually sets the value of dated Brent.

Output of the BFOE crudes is expected to increase in February to 964,000 bpd, based on the latest revisions to loading schedules, from 794,000 bpd in January.

Brent prices still reflect a perception of tight supply, although the premium at which oil for immediate delivery is trading has fallen in January. The front month contract was trading 97 cents above the second month on Tuesday, down from $1.28 on Jan. 2.

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