Price slump sees 65,000 jobs lost
North Sea oil and gas needs ‘transformation’ to compete
Trade body Oil and Gas UK said that 15% of the offshore workforce has paid the price of the slump in prices to around $50 per barrel and operating costs remain high.
Deirdre Michie (pictured), chief executive, said in the organisation’s latest economic report: “Last year, more was spent than was earned from production, a situation which has been exacerbated by the continued fall in commodity prices. This is not sustainable and investors are hard-pressed to commit investment here because of cash constraints.”
Exploration is at its lowest level since the 1970s and capital investment is expected to drop from £14.8 billion last year to about £4bn in each of the next three years as “difficult decisions” are taken.
Even so, the industry may have “turned the corner”. Mike Tholen, Oil & Gas UK’s economic director, said: “Strong investment in asset integrity over the last four years, coupled with measures being taken to improve the efficiency of assets offshore, have resulted in better output from many existing fields and we expect the rate of decline in production from those fields to slow significantly over the next two years.
“Taken together with the start-up of the sizeable Golden Eagle field, the government’s provisional data show that production in the first half of 2015 was 3 per cent higher than the same period in 2014, an indication that over this year, we are likely to see annual production increase.”
Ms Michie added: “The industry is under a lot of pressure and it is now widely recognised that a transformation in the way business is done is required if the UK sector is to become more resilient and competitive in a world of sustained lower oil prices.”