LONDON, Dec. 19 (UPI) -- Oil industry officials told the BBC the more than 40 percent drop in the price of crude oil is putting the regional energy sector in a state of emergency.
Oil prices for the week are recovering from historic lows, though Brent, a crude index based on North Sea oils, at one point fell below the $60 mark for the first time in more than five years. Robin Allen, chairman of the independent British exploration association Brindex, told the BBC the regional industry was in a state of contraction.
"It's close to collapse. In terms of new investments - there will be none, everyone is retreating, people are being laid off at most companies this week and in the coming weeks," he said. "Budgets for 2015 are being cut by everyone."
Major international oil companies, from Marathon in the United States to British energy major BP, have trimmed their investment forecasts with oil trading in a bear market.
BP in November said it could cope with an oil price as low as $60 per barrel, though BP Chief Executive Officer Bob Dudley said the company was working on a "simplification plan" in the current market.
Oil production from the North Sea has been in decline since the late 1990s. Government data show a decline of 7 percent from last year, though the rate is slowing.
The government in February said it was moving forward with recommendations from retired businessman Ian Wood, who led a panel tasked with finding ways to breathe new life into North Sea reserve basins.
Wood's panel found there may be an additional 4 billion barrels of oil equivalent available for recovery in the North Sea.
Graham Sadler, managing director of petroleum at business services company Deloitte, told the British news service last week that if oil prices stay below the $70 mark for long, North Sea producers will "start to struggle."
The British Department of Energy and Climate Change, meanwhile, said the current market was presenting major challenges for North Sea operations, though it's seen "very little evidence" to suggest project were being cancelled as a result of low oil prices.
