North Sea oil exploration suffering as banks refuse to lend

Recession may push North Sea oil and gas production into a much steeper decline than previously forecast due to the difficulties faced by smaller oil companies in getting finance to pay for exploration and oilfield development.

Industry leaders warned in Aberdeen yesterday at a media briefing that up to a quarter of the 20 billion barrels of oil known to be still recoverable from the North Sea may stay in the ground because of the contraction in the lending capacity of the banks and other financial institutions.

They added that this and uncertainties around future government tax policies towards the offshore industry could cost the government up to