* Operator confirms Buzzard output started, ramping up
* Field contributes to the physical supplies underpinning Brent
* May add pressure to Brent as it trades near 16-month low (Adds Nexen confirms restart of production, source quote background, Brent price)
By David Sheppard and Alex Lawler
LONDON, Sept 4 (Reuters) - Production at the UK’s North Sea Buzzard oilfield has restarted and will ramp up over the next week after the demobilisation of a drilling rig, its operator said on Thursday, marking the return of one of the key fields that underpins Brent oil futures.
“With the safe demobilisation of the drilling rig complete, production on Buzzard has now recommenced and will ramp up over the next week as planned,” Calgary-based Nexen, owned by China’s state-back CNOOC, said in an updated statement on Thursday.
The operator had released a statement earlier saying output at the 200,000 barrel-per-day (bpd) field would ramp up over the next week, and then released another to say some production was already underway, confirming reports from industry sources.
“Oil export returned yesterday evening,” one industry source said on Thursday.
Buzzard is closely watched by oil traders worldwide as it is the biggest contributor to the Forties oil stream, the largest of the four benchmark crudes that are the physical supply behind international benchmark Brent crude oil futures.
The field has undergone a series of restarts and shutdowns since returning from summer maintenance at the end of August, with Nexen saying it wanted to carry out additional work to demobilise the drilling rig during a period of good weather.
On Tuesday Nexen said the demobilisation work could take another week.
Traders said the shutdowns were reminiscent of 2012 when the Buzzard field experienced a series of delays during start-up after prolonged maintenance, creating volatility in the Brent price as investors struggled to gauge supplies.
But now Buzzard is returning at a time when supplies in the North Sea and the Atlantic Basin are ample, potentially adding pressure to Brent, which fell to a 16-month low this week.
Buzzard’s return may also weigh on price differentials for physical North Sea cargoes, especially for those loading in the near future.
Price differentials are the premiums or discounts at which physical cargoes trade to Brent. Differentials for many North Sea crudes collapsed to multi-year lows this summer due to weak demand and ample supplies of competing crude grades, but had been slowly recovering.
Forties production, including from smaller fields that contribute to the stream, was expected to be around 340,000 bpd in September, according to the original loading programme, but cargoes will likely have been delayed.
The Forties loading programme for October is expected to be released on Friday.
Brent crude oil futures were down 15 cents a barrel at $102.62 at 1026 GMT on Thursday, having bounced off a 16-month low of $100.17 hit on Tuesday. (Reporting by David Sheppard and Alex Lawler in London; Editing by David Evans)