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The Herald Scotland
5 days ago
- Business
- The Herald Scotland
North Sea output to hit 50-year low amid slump in investment
'The latest medium-term forecast sees a comfortably supplied oil market through 2030,' said the watchdog in its closely-watched annual review of market trends. The report notes that strong production growth is expected in a range of countries including the USA, Canada and Brazil but reckons the UK will be an exception - unless more firms commit to field developments. The IEA warned that UK North Sea production could hit a 50-year low by 2030 'without a robust queue of new projects to be sanctioned'. The comments could lead to the Labour Government facing increased pressure to cut the windfall tax on North Sea profits, which industry leaders say has led firms to slash investment in the area. READ MORE: SNP Government renewables fixation absurd as windfarm swich off bill soars However, the IEA said there remains significant uncertainty about the short-term outlook for oil and gas prices, as it highlighted factors that could result in prices rising or falling. 'With conflicts in the Middle East region at risk of intensifying and trade negotiations ongoing, uncertainties surrounding our forecasts are substantial,' said the agency. The Wood Mackenzie energy consultancy said the fighting between Iraq and Israel had potentially wide-ranging implications for global oil and gas markets. 'The key risk of greater impacts, for both oil and gas, would emerge if Iran decided to attack shipping in the Gulf or the Strait of Hormuz,' noted the Edinburgh-based specialist. 'The impact of that on oil prices would be significant. Brent crude could move towards US$90 to US$100/bbl.' READ MORE: Israeli-owned firm takes control of UK's biggest gas field Brent crude sold for $75.04/bbl in afternoon trading, up $1.81/bbl on the day. The price surged in the wake of Israel launching attacks on Iran, from around $65 per barrel in early June to $78/bbl on Monday. Brent has given up some gains since then as traders concluded that Iran was unlikely to risk an attack on the Strait of Hormuz which separates Iran from Oman and through which millions of barrels of crude oil are shipped daily. The crude comes from a range of countries including Saudi Arabia and Qatar as well as Iran, which may have decided that an attack on the strait could risk military intervention by the USA. Reuters reported that two tankers collided near the strait today but there were no injuries to crew or spillage. While an attack on the Strait of Hormuz or facilities in the region could trigger a significant rise in prices the impact may be short-lived. The price rise could lead to a reduction in demand which would weigh on the market. The IEA cautioned: 'Heightened geopolitical risks, unresolved trade tensions, and policy shifts have added myriad uncertainties to the oil market outlook.' READ MORE: North Sea oil giant plans $500m investor payouts as it cuts jobs However, the agency's prediction that supplies of oil and gas will exceed demand in coming years reflects trends that it seems to think are firmly established. Demand is expected to come under pressure with experts forecasting that global economic growth will slow in response to factors such as the tariff wars started by US president Donald Trump. The IEA said: 'China – which has driven the growth in global oil demand for well over a decade – is set to see its consumption peak in 2027, following a surge in electric vehicle sales and the continued deployment of high-speed rail and trucks running on natural gas.' At the same time, the IEA noted, the decision by the OPEC+ producer group to start unwinding oil production curbs in May would reset oil supply trajectories over its 2024-30 forecast period. The group is led by Saudi Arabia and includes Russia. The IEA noted that the anticipated output increase from OPEC+ and the impact of higher tariffs on trade pushed oil prices to four-year lows in April and early May. It said oil executives have been recalibrating their investment plans in response to the price fall. The agency reckons the North Sea is facing a watershed as firms grapple with political and regulatory pressures. The Labour Government increased the rate of the windfall tax in the Budget. It is conducting a review of the regulatory regime concerning field developments and has said it will not issue exploration licences covering new areas. READ MORE: North Sea drilling curb plan looks mad amid Trump trade threats The IEA said firms operating in the UK North Sea appeared to be focused on maximising the returns generated on existing assets rather than investing in new ones. By contrast Norway has seen more project approvals and field developments in recent years. Production may hold steady in the UK North Sea in 2025, following years of decline. This reflects the impact of a small number of big developments sanctioned in recent years, including BP and Shell's Clair Ridge project West of Shetland. The IEA warned that these would only be sufficient to slow the decline in production temporarily following years of weak investment. The IEA has predicted that global oil demand will increase by 2.5 million barrels per day (mb/d) between 2024 and 2030, reaching a plateau of around 105.5 mb/d by the end of the decade. Global oil production capacity is forecast to rise by more than 5 mb/d to 114.7 mb/d by 2030.
The Herald Scotland
6 days ago
- Business
- The Herald Scotland
Energy bills swollen by Scottish windfarm switch off costs
However, critics focused on the revelation that the Westminster administration planned to use £2.5bn allocated to the fledgling Great British Energy operation to fund work on a new generation of small modular nuclear reactors. SNP supporters slammed the move which they claimed would leave a big hole in the £8.3bn budget that GB Energy had promised would be used to support the development of technologies such as floating offshore wind and tidal energy. Keir Starmer decided to put the official headquarters of GB Energy in Aberdeen to mollify critics of his cabinet's decision to curb oil and gas activity. But the SNP Government has opposed North Sea field developments that could create thousands of jobs. It has pinned its hopes on the expansion of wind power, which acting climate change minister Alasdair Allan claimed recently could create thousands of high-quality jobs in support of a just transition from dependence on oil and gas. The number of renewables jobs created in Scotland, however, has fallen below expectations for years. READ MORE: Just transition furore reignited as SNP Government flounders Mr Allan put the onus on the UK Government to help accelerate windfarm development in Scotland by improving the support provided for developers under the flagship Contracts for Difference programme. Energy secretary Ed Miliband has held out the prospect that the budget for the forthcoming CfD allocation round will be much bigger than the £1.6bn set for the last one. The costs will be added to the bills of householders regardless of their income. But figures from the body that regulates the national energy system show bill payers have reason to be concerned about the wisdom of accelerating a programme that imposes costs on them that many can't afford. The National Energy System Operator revealed that the size of the bill it has to pay to deal with supply issues stemming from the fact that output from renewables such as windfarms is intermittent soared to £2.7bn in the latest year from £2.5bn in the preceding period. The balancing payments include amounts that NESO pays to compensate windfarm operators that are asked to constrain generation when there is insufficient demand. They also include payments made to operators of gas fired power stations to increase output when there is not enough wind power to meet energy requirements. READ MORE: Israeli-owned firm takes control of UK's biggest gas field NESO said the increase was driven by a rise in constraint costs and made clear that this was largely due to the fact that so much windfarm capacity has been added in Scotland although demand is much higher south of the border. 'Whilst payments to generators are distributed throughout the country the cause of cost is concentrated in Scotland,' it said. The organisation underlined the absurdity of the situation we find ourselves in after rushing to develop windfarms without ensuring the required infrastructure was in place to transport the power produced to where it is needed or to store it. The Seagreen windfarm off the Angus coast became fully operational in 2023 (Image: SSE) Noting that wind curtailment is currently a major driver of balancing costs, NESO said: 'This is because a large proportion of wind capacity in GB is connected in Scotland, which at present is a constrained region of the network. 'This means that when wind generation is high we must take actions to turn down wind output and turn on replacement energy in unconstrained regions to keep the system balanced.' The NESO report emphasises that the costs resulting from this situation fall on householders. In 2024/25 balancing charges added around £3 a month to a typical domestic electricity bill. That may not sound much but household bills are also inflated by other charges such as those related to CfDs and the Climate Change Levy. NESO's analysis indicates that developing more windfarms will make things worse for the time being. It warned: 'Balancing costs are expected to rise in the short term, reaching a peak of ~£8bn in 2030.' Part of the solution will involve a massive expansion of electricity transportation networks in the face of potential opposition from locals in areas affected and of storage facilities. However, energy giants such as SSE and Drax have made clear they will only make the hefty investment required to develop hydro storage facilities if the UK Government provides enough support for revenues to ensure they can generate strong returns. READ MORE: Scottish hydropower hopes fade amid threats to bumper projects This all means that power generation assets that can ensure the country can keep the lights on irrespective of weather conditions will be required for years. The case for SSE to be allowed to develop a new gas fired power station at Peterhead has been strengthened after the UK Government agreed to provide £200m initial development funding for the Acorn carbon capture scheme. This will take emissions from the plant for storage in depleted reservoirs in the North Sea. Friends of the Earth Scotland insists the Peterhead plant would be a climate disaster and has berated the Scottish Government for failing to properly interrogate SSE's assurances about related emissions. The organisation is bitterly opposed to plans for the Scottish carbon capture cluster which it reckons could be used to excuse continued production of oil and gas. The SNP Government, however, has spent years pressing UK ministers to fund the Scottish cluster, which could cost around £12bn to develop in full. Scottish Gas owner Centrica recently underlined the scale of expected demand for gas by agreeing a £20 billion deal to secure supplies from Norway until 2035. That deal may have been timely as oil and gas prices have soared in the wake of Israel launching attacks on Iran last week. READ MORE: SNP Government oil hypocrisy shocking amid Scottish jobs cull Against that backdrop it makes sense for the UK to maximise production of its own oil and gas. The case for investing in nuclear plants that can provide baseload power is also reinforced by concerns about the UK's dependence on imports of oil and gas. Nuclear plants take years to develop but could remain operational for decades. Add in the fact that work on a plant could create thousands of construction jobs and many more in the supply chain and it is little wonder the SNP Government is under pressure from trades unions to abandon its opposition to the development of nuclear power stations in Scotland.
Straits Times
13-06-2025
- Politics
- Straits Times
Timeline: A recent history of the Israel-Iran conflict
A building stands damaged in the aftermath of Israeli strikes, in Tehran, Iran, on June 13. PHOTO: REUTERS The conflict between Iran and Israel has escalated yet again. On June 13 morning, explosions rocked Tehran as Israel carried out a major attack intended to cripple the country's nuclear programme, Israeli officials said. The strikes raised fears the long-simmering conflict between the two countries could escalate into a war involving the most powerful militaries in the Middle East. Iran's rulers have pledged to destroy Israel and have long supported regional militias who share that goal. Israel views Iran as an existential threat and has vowed to prevent it from building a nuclear bomb. In the past year, Israel and Iran have traded airstrikes as their once covert war has burst into the open. Here is a recent history of the conflict: 2019 Strikes against Iran's allies Israel carried out a series of attacks in Syria, Lebanon and Iraq to prevent Iran from equipping its allies with sophisticated weapons. Israel accused Iran of trying to establish an arms supply line through Iraq and northern Syria into Lebanon, where Iran had long backed the militant group Hezbollah. Israel also attacked ships carrying Iranian oil and weapons through the eastern Mediterranean and Red seas. 2020 A remote-controlled assassination In November, Israel killed Iran's top nuclear scientist, Mohsen Fakhrizadeh, with a remote-controlled machine gun. 2021 Skirmishes at sea Iran and Israel increasingly began attacking each other at sea. Israeli Prime Minister Benjamin Netanyahu accused Iran of being behind a February explosion on an Israeli-owned ship transporting vehicles sailing off the coast of Oman. Iran accused Israel in March of targeting an Iranian cargo ship about 50 miles off the coast of Israel. In April, an Iranian military vessel stationed in the Red Sea was damaged by an apparent Israeli mine attack. Such operations continued through the year. 2022 Assassination of an Iranian officer In May, two assassins on motorcycles shot and killed Col. Sayad Khodayee, an officer in Iran's Revolutionary Guard. Israeli officials said he helped command a covert operations unit that conducted assassinations and abductions. Israel confirmed its role in the killing to the United States. Two scientists die Ayoub Entezari, an aeronautical engineer at a military research facility, and Kamran Aghamolaei, a geologist, died in May after developing symptoms of food poisoning. Iran said Israel poisoned them, but Israel declined to comment. 2023 The Oct 7 attacks Palestinian militants led by Hamas, which is backed by Iran, attacked Israel, igniting a deadly war in the Gaza Strip. In solidarity with Hamas, other Iranian-backed militias in the region, including Hezbollah in Lebanon and the Houthis in Yemen, also attacked Israel. Iran's supreme leader, Ayatollah Ali Khamenei, denied that Iran had any role in the Oct 7 attacks. But Hamas leaders spoke broadly about receiving support from regional allies, and documents show the group discussed its plans with Iran. An airstrike in Syria In December, Iran accused Israel of killing a high-level Iranian officer in a missile strike in Syria. 2024 A strike on Damascus, and several rounds of retaliation In April, an Israeli airstrike on an Iranian Embassy building in Damascus killed three top Iranian commanders and four officers. Weeks later, Iran launched more than 300 drones and missiles at Israel, nearly all of which were shot down. Soon after, Israel attacked an anti-aircraft system in Iran that protects a nuclear facility. An assassination in Tehran In July, Ismail Haniyeh, Hamas' political leader, was assassinated in an explosion in a guesthouse in Tehran run by the Iran's Revolutionary Guard. Israel later confirmed that it was behind the killing. A pager attack In September, Iran's ambassador to Lebanon, Mojtaba Amini, lost an eye in a massive simultaneous pager attack targeting Hezbollah members. Similar attacks on electronic devices followed in subsequent days, killing dozens of people and injuring thousands. Israel later confirmed it conducted the attacks. Hezbollah leader killed In September, Israel killed Hezbollah's leader, Hassan Nasrallah, in airstrikes near Beirut, Lebanon's capital. Iran fires at Israel Iran in October fired about 180 ballistic missiles at Israel, in retaliation for Israel's assassinations of Nasrallah, Haniyeh and an Iranian commander. Most were intercepted. Israel targets Iran's air defences Israel launched airstrikes on Iran in late October that destroyed air-defence systems intended to protect critical infrastructure. The airstrikes in April and October took out air-defense systems that Iran purchased from Russia, Iranian and Israeli officials said, including one in central Iran that is critical to the country's nuclear programme. 2025 Mr Netanyahu proposed to President Donald Trump a plan to strike Iranian nuclear sites, which Trump administration members debated for months. In April, Trump decided to pursue diplomacy instead. Recently, Iran rejected the administration's demand to stop all uranium enrichment, but talks about its nuclear program are set to continue. On June 12, Mr Trump said there was a risk that Israel could strike Iran, torpedoing the talks. 'I think it would blow it,' he said. 'Might help it actually, but it could also blow it.' NYTIMES Join ST's Telegram channel and get the latest breaking news delivered to you.
The Herald Scotland
10-06-2025
- Business
- The Herald Scotland
Aberdeen oil services jobs under threat as bidder eyes Wood
The 35p per share deal under discussion with Abu Dhabi-based Sidara would value Wood at around £240m. The outcome of Sidara's deliberations will be awaited anxiously by staff at Wood, which grew from a fishing business to become a leading player in the global market to help firms develop and operate oil and gas facilities. Wood employs 4,500 people in Aberdeen and the North Sea operations it runs mainly from the Granite city. The Put Up or Shut Up deadline for Sidara to make a firm offer has been extended three times since it made an initial approach in February. Sidara decided to scrap a £1.5bn bid to buy Wood in August last year citing concerns about geopolitical risks and financial market uncertainty. The group's decision to return to the fray indicated it saw significant value in the expertise offered by Wood. The company announced today that it had won a $2.8 billion (£2.1bn) contract to work on a gas processing plant in the United Arab Emirates. READ MORE: Scottish hydropower hopes fade as major projects face threats SNP Government oil hypocrisy shocking amid Scottish jobs cull Israeli-owned firm takes control of UK's biggest gas field However, Wood has faced big challenges in recent months. In February Wood issued a disappointing trading update and announced plans to slash costs to help reduce its debts. The company also revealed that an independent review of its key projects division had identified material weaknesses and failures in respect of financial culture, governance and controls. Wood subsequently delayed publication of its latest annual results until June 30 citing the timing of the conclusion of the independent review and the extensive work needed to conclude the audit of last year's numbers. Against that backdrop, Sidara has likely faced challenges in its efforts to decide on a valuation for Wood. The task has been complicated by uncertainty about the outlook for activity in the key North Sea oil services markets. Some firms that operate oil and gas fields have shelved plans to cut investment in new developments and upgrades following the increase in the windfall tax rate in the Budget in October. Chancellor Rachel Reeves has faced great pressure to reduce the tax burden on the sector in recent weeks while completing work on the Labour Government's Comprehensive Spending Review. The results of the review will be announced tomorrow. If Sidara decides to proceed to make a firm offer for Wood there will be mixed feelings in Aberdeen. Wood chief executive Ken Gilmartin has insisted the company can prosper as an independent. But he and other directors have said that if Sidara makes a formal offer on the terms under discussion they would be minded to recommend that Wood shareholders accept it. Sidara has said that it recognises and wants to retain the talent offered by Wood employees. There will still be concern in Aberdeen that jobs will be vulnerable as Sidara looks to maximise the return on any investment it makes. Meanwhile the loss of another stock-market listed firm would deprive Scotland of valuable professional services work and could leave the country struggling to interest international investors.
The Herald Scotland
03-06-2025
- Business
- The Herald Scotland
Hopes of big green jobs boost for Highlands and Argyll fade
However, the projects have been cast into uncertainty after cost increases and concerns about issues such as planning consents weakened the commercial appeal of schemes that would entail hefty upfront investment. Perth based SSE has held out the prospect the Coire Glas development could store enough power for three million homes. It would work by harnessing the power generated by the flow of water between two reservoirs that SSE plans to develop by Loch Lochy. The company would use power generated by windfarms in times of low demand to pump water into the upper reservoir. When demand increases the water will be allowed to flow into the lower reservoir turning huge turbines in the process. Drax has developed a plan to double the capacity of the massive Cruachan Hollow Mountain facility in Argyll, which would involve hollowing out spaces in which it would install more turbines. READ MORE: SNP Government oil hypocrisy shocking amid Scottish jobs cull Israeli-owned firm takes control of UK's biggest gas field The companies have claimed the schemes could provide vital support for the renewables revolution by tackling the problem caused by the fact that the UK does not have enough capacity to store renewable energy or transport it to centres of high demand. But in its annual results SSE said it planned to reduce its investment budget by £3 billion, to £17.5bn, citing the challenges posed by the macro environment and planning issues. Chief executive Alistair Phillips-Davies said a range of projects including Coire Glas would be delayed as a result. Mr Phillips-Davies said the giant Berwick bank windfarm development off Scotland had also been delayed, as a long wait for the Scottish Government to provide planning consent drags on. He complained to reporters that the scheme has been on ministers' desks for about three years. The announcement by SSE came a fortnight after Drax announced that the Cruachan expansion project had been put on hold following a significant rise in costs. The statements leave huge uncertainty hanging over projects that were expected to provide a badly-needed boost to flagging hopes that Scotland will enjoy a green jobs boom. The number of jobs created has fallen well short of expectations, partly because windfarm developments require relatively few people to complete. Coire Glas and the Cruachan expansion scheme would be unusual in featuring large scale construction work. SSE has completed some preparatory work for the Coire Glas development by Loch Lochy (Image: SSE) Experts have highlighted the fact Scotland urgently needs to accelerate the pace of green job creation amid turmoil in the oil and gas sector. There are fears that firms could cut hundreds of jobs in response to the Labour Government's decision to increase the windfall tax rate in its first Budget. In a report issued today Robert Gordon University says the UK oil and gas energy workforce could shrink by approximately 400 jobs every two weeks for the next five years – the same number lost as a result of the closure of the Grangemouth refinery – unless governments take urgent action. It notes: 'Before 2027, there is likely to be limited capacity for the UK offshore renewables sector to host and accommodate the quantity of oil and gas workers becoming available on the job market.' Oil and gas industry leaders are mounting a last ditch bid to persuade chancellor Rachel Reeves to provide relief when she announces the results of her Comprehensive Spending Review on June 11. Offshore Energies UK said the Government should bring forward the date for the ending of the windfall tax to 2026 from 2030. The trade body claimed: 'Independent data from the Office of National Statistics confirms that the profits for those investing in the UK oil and gas sector have fallen to negative levels, but the tax remains - holding back vital investment across the UK's energy landscape.' READ MORE: North Sea giant eyes major expansion move as oil and gas job losses mount Just transition furore reignited as Scottish Government flounders OEUK chief executive David Whitehouse said the UK needed the output of the oil and gas industry and the support firms could provide for the development of green energy sources. 'The sector needs action now to secure jobs, boost energy security, and build for the future. That means a commitment from government to deliver a mechanism in 2026 that creates a predictable response to future price shocks,' declared Mr Whitehouse. 'This is what is needed to unlock investment in UK energy - oil, gas, renewables, hydrogen, and carbon capture.' But SSE and Drax made clear they will only proceed with big pumped hydro storage projects if tough conditions are met. SSE chief executive designate Martin Pibworth noted the company is in talks with Ofgem about the cap and floor mechanism the regulator has proposed to guarantee firms a minimum price for the output from pumped hydro storage schemes. Regarding Coire Glas, he said: 'We will only progress if we are convinced we have a solid remuneration contract with appropriate risk-adjusted returns.' Drax said: 'We will not be entering the forthcoming Cap & Floor application process while we evaluate the investment case for the [Cruachan expansion] project.' The bad news from SSE about Coire Glas and Berwick Bank will compound the disappointment caused by the company's decision to shelve plans for the Bhlaraidh windfarm extension in the Great Glen because bosses did not like the look of the 'risk-return profile'. But SSE will still spend heavily on growing its renewables generating capacity in the expectation that it will generate strong returns on investment in favoured projects. Mr Pibworth said: 'The vast majority of this growth will be delivered by the first two phases of Dogger Bank [off Yorkshire] and well-progressed onshore and battery projects.' He highlighted the value of the support the favoured projects will get under UK Government schemes such as the Contracts for Difference (CFD) programme - the costs of which are added to household energy bills. 'Crucially, these investments are underpinned by long-term government-backed contracts such as CfDs or the capacity mechanism, providing price certainty and inflation protection for the vast majority of volumes produced,' said Mr Pibworth. SSE said it championed a fair and just energy transition, as it posted a near £2bn operating for the latest year, The company said it supports 62,000 jobs in the UK and around 5,200 in Ireland. But householders who are grappling with high energy bills may wonder who will be the biggest beneficiaries of SSE's investment in renewables. The company expects to reward shareholders with inflation-busting increases in dividend payments of up to 10% for the next two years.
