UK’s oil industry close to collapse: Senior British official

A senior British energy official says the UK’s oil industry is “close to collapse” due to a recent dramatic fall in crude prices.

“It’s close to collapse. In terms of new investments – there will be none, everyone is retreating, people are being laid off at most companies this week and in the coming weeks,” said Robin Allan, the chairman of the independent explorers’ association Brindex.

He added that the plunge in oil prices pushed the industry into “crisis” and oil companies are cutting staff and investment to save money.

“Budgets for 2015 are being cut by everyone,” he said.

“It’s almost impossible to make money at these oil prices,” Allan told the state-run BBC. “It’s a huge crisis.”

“This has happened before, and the industry adapts, but the adaptation is one of slashing people, slashing projects and reducing costs wherever possible, and that’s painful for our staff, painful for companies and painful for the country,” he said.

The remarks come as oil prices have reached a new low, dipping below USD 60 per barrel, for the first time since May 2009.

The sudden decrease in prices also stems from faltering global demand and the refusal of some producers, particularly Saudi Arabia and some other Persian Gulf monarchies, to cut their current output.

US multinational investment banking firm Goldman Sachs said the plunge in oil prices could threaten USD 930 million of investment in new oil projects. As a result, new oil output could be cut by 7.5 million barrels a day, or eight percent of the current demand, by 2025.