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Ongoing investments in existing development projects, most of which were sanctioned when the oil price was

higher than $100/bbl, will hold annual investment up to at least £5 billion in 2018 but the longer term trend

remains negative.

With most potential new developments requiring a break-even oil price in excess of $50/bbl, companies are

re-evaluating development concepts to achieve significant cost savings before committing to new projects. This

project slippage may present some upside on the forecast towards the end of the decade but only if market

conditions improve.

Figure 22: Capital Investment

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4

6

8

10

12

14

16

2012

2013

2014

2015

2016

2017

2018

Capital Investment (£ Billion - 2015 Money)

Potential Upside from Projects yet to be Sanctioned

Committed Investment

Source: Oil & Gas UK

Figure 23 overleaf shows that only one new field has been approved so far in

2016 at the time of writing, with less than £100 million of fresh capital

committed to the basin. With few projects approaching sanction, it is possible

that there will be no further commitments to investment in greenfield

projects this year. This is set to be the worst year in the history of the UKCS

for new field approvals. Brownfield opportunities are also scarce with just

five addendums to field development plans sanctioned so far and few

expected for the rest of the year. This is compared with ten in 2015 and

28 in 2014.

Less than

£100 million of

fresh capital has

been committed

to the basin so

far this year.