How Are Plummeting Oil Prices Affecting the Biggest Energy Firms?

It’s no secret that across the globe, oil prices are plummeting. While it may be great news for motorists, the energy firms that rely on crude to turn a profit aren’t quite as over the moon. In fact, some have been thrown into downright disarray.

The latest energy firm to feel the pinch is Total, one of the biggest operators in the North Sea. In the wake of the oil price collapse the company has sold off £585m of UK gas interests in a bid to slash operational costs.

Parting with pipelines

The French owned group has made a rash decision to flog its interests in two major pipelines. One transports gas from 20 North Sea fields while the other is Scottish based gas terminal, St Fergus. When added to the value of disposals Total has racked up in the past two months, the latest sale brings the figure to over £1 billion. This includes a £565m stake transfer from a Shetland Island gas field to SSE, a major British energy supplier.

While Total shareholders may not be pleased, the company maintains that the move was pulled off to raise funds. Patrick de la Chevardière, chief financial officer explains, “The sale of these midstream transportation assets is another example of Total’s strategy of active portfolio management, and the strong potential to unlock value from a range of infrastructure assets.”

Other companies feeling the pressure

Total isn’t the only energy firm feeling the effects of the oil price crash, with Maersk Oil also announcing plans to close down its North Sea Janice field as well as cut 200 jobs. For other companies with ventures in the North Sea, the outlook isn’t looking great. Due to the fact that it’s a high cost, “mature” hydrocarbon region with low potential for additional lucrative discoveries, its fields are particularly at risk of cutbacks.

The rapid asset sales point to a collapse in North Sea oil production however companies such as Total, Shell and BP maintain that there is still plenty of opportunity to tap into.

“We see midstream infrastructure as crucial to the longevity of the North Sea and firmly believe that the independent ownership of such infrastructure can help maximise the ultimate economic recovery of [UK] oil and gas reserves,” says Andy Heppel, chief executive of North Sea Midstream Partners.

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