The future of Britain’s offshore oil industry hangs in the balance as losses mount and investment collapses.
A new report by Oil & Gas UK predicts that 43% of British oil fields in the North Sea will lose money this year if oil prices remain around $30 per barrel.
The trade association expects spending on new oil projects will fall below £1 billion ($1.4 billion) in 2016, compared to £8 billion ($11.3 billion) in a typical year.
“We are an industry at the edge of a chasm,” said Deirdre Michie, CEO of Oil & Gas UK, in a statement.
Crude prices are currently trading around $33 per barrel after falling by about 70% since the summer of 2014.
The industry is awash with excess oil. Slowing demand growth, and the decision by OPEC — led by Saudi Arabia — to keep producing at near record levels, is keeping markets oversupplied.
Saudi Arabia and Russia recently agreed to freeze oil output. But that agreement alone is unlikely to boost prices much in the near term.
Data from energy intelligence firm Rystad Energy shows it costs British producers about $52 to pump a barrel of oil, on average. Saudi and Russian average production costs are much lower, at $9.90 and $17.20 respectively.