Total UK: Plans To Reduce N Sea Operating Cost By 20% In 2009

French oil major Total SA's (TOT) U.K. unit is aiming to slash its North Sea operating costs by a fifth this year, renegotiating deals with suppliers and canceling or postponing non-essential works, among other measures, the company said Thursday.

"We need to cut (North Sea) operating costs around 20%," said Roland Festor, managing director of the company's U.K. exploration and production arm, through a systematic evaluation of existing service contracts when they come up for renewal, and looking at which projects could be considered non-essential spending.

Costs have risen exponentially for oil and gas operators in the North Sea in the last year, partly as a result of a lower price environment but additionally due to lack of competition between service providers, and the high cost of labour, the company said.

But the company emphasized it is still investing and recruiting, and plans to move forward with development of the Laggan and Tormore gas fields in the West Of Shetland area of the U.K. North Sea, and expects to give the go-ahead for the investment in September.

-By Angela Henshall, Dow Jones Newswires; [phone]; [e-mail]