There is little sign of slowing declines in output in the near term due to insufficient investment, Covid-19, and persistent low oil prices relative to required breakeven levels.
Assuming production of other local grades does not increase, only JS can offset the falling British and Danish production of traditional North Sea grades to ensure sufficientliquidity in the physical aspect of dated Brent trading”.
Likewise, the field benefits from very low breakeven rates at $20/bbl upon completion and an attractive environmental profile due to its connection with low carbon renewable shore-based hydroelectricity”, Gibson noted.
This is further supported as European refinery runs are unlikely to recover to prepandemic levels in turn boosting exports out of the region on larger crude carriers.All in all, it is clear the uncertainties surrounding dated Brent contracts are likely to remain, but with regional demand under pressure, long haul exports are likely to grow”, Gibson concluded.