Oil and gas producers are higher this morning as oil prices break through $65 per barrel for the first time in more than two years. Major oil firms BP (BP.) and Royal Dutch Shell (RDSB) are up around 1% apiece.
The catalyst is the closure of the Forties pipeline for emergency repairs over the next few weeks. This key piece of infrastructure, which only changed hands from BP to chemicals business Ineos six weeks ago, delivers around 40% of the oil and gas output from the UK North Sea.
Although the spike in oil prices is generally positive for the sector, the closure has consequences for producers which rely on access to the pipeline.
WHO DOES THE CLOSURE AFFECT?
Serica Energy (SQZ:AIM), currently working through a high-profile deal to acquire assets from BP, reduces its 2017 production guidance this morning from a range of 2,200 to 2,400 barrels of oil per day (bopd) to 2,000 bopd. Its shares falling 3.5% to 73.1p in response.
The only producing asset in its portfolio at present, the Erskine field, uses the Forties pipeline. Consumers may also face an increase in energy bills as the UK endures freezing temperatures.