Oil production hits six-year low

Oil production hit a six-year low in June

Oil production in the UK has fallen to its lowest level in six years, according to new figures.

Economists from the Royal Bank of Scotland have published statistics which show that production fell below two million barrels a day during June.

The average value of output during this period was £39.23m a day - a drop of nearly £10m on the previous year.

Britain's oil production comes mainly from the North Sea.

Gas production is forecast to hit last year's high

Bank economists say a combination of factors - summer maintenance shutdown periods, uncertainty over oil prices and the legacy of a period of low investment in 1999 and 2000 - were responsible for the decrease.

In the period from May to June, the Royal Bank's oil and gas production index fell from 131.8 to 121.1.

Average daily output figures show the May level of 2.17 million barrels a day tailing off to 1.993 million barrels a day in June.

The bank's economists also said that the daily value of oil produced in June was £3.8m lower than May's level.

However, gas production over the same period averaged £11.83m a day, and industry experts expect total production in 2001 to match last year's historic peak.

The index figures showed that oil prices in June dropped in both dollar and sterling terms, and have weakened further since then to stand at about $25 a barrel.

The Royal Bank's oil and gas economist Tony Wood said prices may fall even further in the near future.

"In the longer term, market demand is weakening, world supply is increasing, and Opec continues to produce well beyond its quota levels, suggesting further downward pressure in prices over the coming months," he said.