It is vital that the UK oilfield services industry makes a permanent shift in strategy from short-term survival to long-term success, according to analysis published by EY Tuesday.
The Review of the UK oilfield services industry report revealed that the overall annual turnover of UK oilfield services declined for the first time since the EY review started in 2008, from $50.2 billion (GBP 40.6 billion) in 2014 to $44.1 billion (GBP 35.7 billion) in 2015. The drop represented a decrease of 12.2 percent.
Despite the year-on-year decrease, however, the 2015 figure still represents a significant contribution to the UK economy and is the third highest annual turnover for the sector in the history of the report, EY said.
Although the data has shown a decline in activity, EY has stated that the analysis indicates that the stabilization of the oil price in the $50 to $60 region, and the early signs of new investment, provide grounds for cautious optimism.
“With the worst of the downturn over and signs of recovery becoming more prevalent, the UK oil and gas sector has reached tipping point with the supply chain playing a pivotal role,” Derek Leith, EY partner and head of oil and gas tax, said.
“As such, the future viability of the oilfield services industry will be largely determined by the decisions and actions taken by leaders in 2017,” he added.
Predicting that the current oil price may prevail for the foreseeable future, Leith said the oilfield services industry must push beyond cost reduction to higher margin sustainable business.
“This needs to be characterised by new commercial relationships, new technology and innovation,” he said.
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