Report: Growing Confidence in North Sea Oil, Gas Industry
There is a growing confidence that the industry has seen the worst of the current market downturn, according to a new report on the North Sea oil and gas sector from PwC.
The report highlighted that the past two years have been a “torrid” time for the industry, but stated that there now appears to be light at the end of the tunnel, with supply and demand seeking a gradual equilibrium.
Utilizing interviews with more than 30 senior stakeholders from the UK, the Netherlands and Norway, across the value chain in the North Sea, PwC’s latest report reveals that the general consensus is that the North Sea has a future. However, a number of “fundamental issues” will need to be addressed in the next 24 months if the basin is to avoid a rapid and premature decline.
The report outlined a need for collaboration, leadership and cost efficiency, as well as an uptick in M&A activity.
“The basin has a history of seeing challenges and overcoming them,” said Ben Taylor, country commercial lead for Shell in the UK and Ireland.
“As before, operators, partners and their supply chain are going to have to work together to sustainably answer these challenges,” he added.
Following the release of the PwC report, Deirdre Michie, chief executive of Oil & Gas UK, commended the UK oil and gas industry.
"Despite facing unprecedented challenges over the past few years the UK oil and gas industry has demonstrated drive and determination. Its efforts to make operations more efficient achieved the first increase in production in 15 years and a 45 percent drop in the cost of doing business this year,” Michie said in an emailed comment to Rigzone.
Michie admitted however that there is still much work to be done within the sector, which will require the joint efforts of industry, governments, the Treasury and the Oil and Gas Authority.
"The most important issues facing our sector are the lack of exploration and little new capital investment,” Michie said.
“In addition, we need certainty in our fiscal regime by a recommitment to the Treasury’s ‘Driving Investment’ strategy for the sector and as part of the UK’s new industrial strategy, to recognize our supply chain as a key strength in the economy, with world leading capability – equally valued as aerospace or the automotive sectors, for example,” she added.
Oil & Gas UK said that it had written to the UK's Chancellor of the Exchequer, asking him to use his Autumn Statement Nov. 23 to help boost investor confidence in North Sea exploration and production. The Scottish National Party joined calls for the UK government to use the Autumn Statement to incentivize North Sea exploration and development Nov. 8.
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