Oil and Gas Decommissions Likely to Accelerate

The cost implications of oil and gas asset decommissioning are expected to “rise significantly” in the medium to long term, according to a report by ESG insights, tools, and data provider Sustainable Fitch. As such, the report forecasts an acceleration of decommissions. It estimates that the decommissioning expenditure by oil and gas companies operating in the UK Continental Shelf in the North Sea is expected to increase from roughly 10% to over 30% in the next 10 to 20 years, while the cumulative costs involved in decommissioning aging assets may reach as much as US$42 billion by 2024. The scale of oil and gas asset retirement is likely to “increase significantly, posing considerable financial, logistical and environmental challenges”, the report added. However, it noted that oil and gas assets are still not viewed in the same light as coal and, therefore, are likely to “remain favourable” over the near-term, as well as their retention of strong cash flows despite European and UK windfall taxes.  

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