North Sea upstream: 5 things to look for in 2022

Long-term upstream uncertainty shows no signs of abating. But in the short-term, things in the North Sea look pretty good. Production growth and near record cash flows in 2022 will strengthen balance sheets and keep economists happy. While investment is set to stay near 20-year lows, a record number of FIDs are on the table; driven largely by Norway's tax package. Deal flow will pick up, even if regulatory uncertainty in the UK will put downward pressure on valuations. Longer term, Glasgow's COP26 placed further emphasis on the phase out and decarbonisation of fossil fuels. Efforts around platform electrification and new energies could see the North Sea emerge as a global leader. But time is of the essence. Fiscal changes could become a hot topic. In the UK, there is high tension between the Government's net zero leader aspirations and yet still encouraging investment in upstream oil and gas. Should it look to wind down the sector, a windfall tax cannot be ruled out.