OREANDA-NEWS. BP expects cost efficiencies in the UK offshore sector to continue gathering momentum over the next few years, resulting in production costs of $12/bl of oil equivalent (boe) in the early 2020s.

"Average production costs — which are the lifting costs plus tariffs — in the North Sea have come down from a peak of over $30/boe in 2014 to less than $15/boe today," BP chief executive Bob Dudley said today at the Offshore Europe conference in Aberdeen. "Heading towards 2020 — with all the major developments coming into production — we expect that number to come down to $12/boe in the North Sea."

A focus on standardisation, simplification and discipline on costs is driving the reduction, he said.

The service sector is equally bullish. UK-listed service firm Wood Group thinks unit production costs could go below $12/boe if existing technology is applied "more smartly" to add value, such as applying digital technology for field maintenance work.