Maintenance to halve North Sea Forties oil in August

By Christopher Johnson

LONDON (Reuters) - Oilfield maintenance will more than halve crude oil production from the North Sea Forties stream next month, trade sources said on Thursday, in a move they said could support physical oil prices.

Just 16 cargoes of 600,000 barrels of Forties will load in August, the loading programme shows, with an average of about 310,000 barrels per day (bpd), down from 658,000 bpd in July and 680,000 bpd in June.

Forties is the biggest single component of what is known in international oil markets as Brent Blend, which is in fact a mixture of North Sea Brent, Forties, Norwegian Oseberg and Ekofisk crudes, or "BFOE."

Brent Blend is used as the basis for Brent futures one of the world's two big oil contracts and is used as the basis for pricing numerous grades of crude oil in Europe, the Middle East and Africa.

Oil traders said the big reduction in supply in August reflected a programme of maintenance work on several small fields that feed into the Forties stream, including the Buzzard oilfield, managed by Canadian oil company Nexen (NXY.TO).

Maintenance often affects North Sea oil output in the summer months although the work programme in August appears to be one of the largest seen for some time, traders said.

Buzzard is Britain's largest field, according to output data compiled by industry newsletter Aberdeen Petroleum Report.

BUZZARD

The Buzzard oilfield, which yields light but relatively high sulphur crude oil, is scheduled to have four weeks of maintenance in the third quarter and traders said the work will start in the middle of August.

Oil companies loading Forties say they have been told that the sulphur content of the crude is due to fall to just 0.3 percent in the middle of August, from the more usual 0.9 percent, as Buzzard goes down.

A spokesman for Nexen confirmed to Reuters that the Buzzard field was due to shut down in August.

"It's mainly Buzzard," said one trader with a European refiner, who said the reduction in Forties was likely to push up the value of Forties and possibly other North Sea grades relative to crudes from other parts of the world.

"I can see Forties values rising as the market tightens and the sulphur content is reduced," another trader with a European company agreed.

In June, the value of Forties, which trades on the spot market at a differential against a benchmark Brent Blend price, fell as early maintenance work on Buzzard sharply reduced supply, traders said.

Three cargoes of Forties, or about 60,000 bpd, were dropped from the June loading programme and several Forties cargoes for June loading were deferred to later loading dates.

(Additional reporting by Joe Brock and Alex Lawler; editing by Peter Blackburn)