Harbour’s Sea Lion exit shows E&P will to de-risk, say analysts

Harbour’s Sea Lion exit shows E&P will to de-risk, say analysts

Harbour Energy’s intention to offload its stake in the controversial Falklands Islands project shows E&P companies’ increasing wariness of new and remote oil markets, according to GlobalData.

The decision by UK-listed independent Harbour to streamline its portfolio and focus mainly on its North Sea assets is notable in that involves an exit from the $1.8 billion Sea Lion project in the Falkland Islands.

Data and analytics company GlobalData notes that many exploration and production (E&P) companies are now employing de-risking strategies as a result of the downturn seen in 2020.

GlobalData senior upstream oil & gas analyst, Effuah Alleyne, said that the downturn throughout 2020 and efforts to de-risk via diversification and streamlining has led many E&P companies to re-evaluate their portfolios.

However, the decision also causes issues for the Falklands Islands Government (FIG), as new remote oil markets are less likely to be desirable.

“Add in political pressure and environmental considerations, and you get the situation faced by the Falklands,” Ms Alleyne said. “The FIG had completely committed to the oil sector, but its efforts have unfortunately come at a time where E&P company investment strategies are focusing on low-risk, high-margin and capital-efficient projects.

“With the industry trending towards energy transition and low-carbon projects, it