North Sea oil producers are in talks to put aside their commercial rivalries and collaborate on an unprecedented scale as they look to slash costs amid some of the toughest market conditions the sector has ever faced.

Premier Oil, one of the biggest independent producers in the North Sea, is leading talks with a handful of other oil companies to merge substantial parts of their operations, including procurement, logistics and finance departments.

The move would be the most significant co-operation ever seen in what is normally a hyper-competitive industry, where companies fight for the smallest advantage over their rivals. The fact that such measures are even being discussed is a sign of how difficult conditions are in the North Sea, where high costs leave companies particularly exposed to the slumping oil price.

Tony Durrant, Premier’s chief executive, said: “We are talking about shared rigs, shared logistics, shared back offices. We are at an early stage, the talks are quite complicated and there are lots of parts involved, but this could be quite radical for our industry.”

Under the plans being discussed, companies could set up a central procurement unit that would buy parts such as valves or piping, which could then be purchased or leased by individual operators.

They could also create other joint back offices, dealing with everything from finance to human resources and logistics.

Such a move would end the practice of increasing differentiation in the equipment that companies use, which has helped drive up costs across the industry. Operators use 28 different shades of yellow paint, for example, to paint their subsea equipment, as well as 250 types of valve stem, each 1/1000th of an inch different in size.

Ministers and regulators have been urging companies for months to collaborate more to try and extend the lifespan of the UK North Sea. Oil and Gas UK, the industry body, warned last month that if oil stays at about $30 a barrel for the rest of 2016, nearly half of all fields will be lossmaking.

Last year the government set up a new regulator, called the Oil and Gas Authority, with a remit to encourage companies to work together to cut costs.

So far this push has met with some success. Some companies are now sharing helicopter flights, for example, or using each other’s platforms.

Faroe Petroleum, for example, which has interests across the North Sea, has secured the agreement of Eni, the Italian oil group, to use the latter’s Hewett gas platform to house some of Faroe’s workers at night.

Some companies are even sharing office space, with many having shut down smaller offices, and job losses having freed up space elsewhere.

But many in the industry say that a more substantial sharing of operations has proved difficult to agree.

Mr Durrant said: “At high oil prices, people worried about the reliability of their equipment and services, and so wanted to control all of that themselves.

“But that has locked in high oil prices, and we have ended up with 100 different supply chains.”

Stephen Marcos Jones, business development manage at Oil and Gas UK, said: “There is without doubt a general trend towards more co-operation across the upstream industry.

“Procurement is an area which presents real scope for improvement so we would support companies working co-operatively to improve efficiency and reduce costs in this area.”

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