British Trade Association Sees Gloomy Prospects

The British oil and gas industry is looking at the future with increasing anxiety, in relation to the current state of play in the markets and rising operational costs. Oil & Gas UK’s Business Sentiment Index passed from -7 to -23 points on a -50/+50 scale, continuing the negative trend registered over most of the last two years.

“Unsurprisingly figures published today reveal serious concerns within the industry in light of the very real problems which face the UK Continental Shelf (UKCS), including rising operational costs and a substantial drop in production efficiency. These existing problems, apparent even when the oil price was above $100 per barrel, have been exacerbated by the recent fall in oil price” Oonagh Werngren, Oil & Gas UK’s operations director, commented on Monday. 

The UK’s trade association confirmed that companies continue to review their budget, adding that capital expenditure will further drop.

‘Comments from contractor companies, working on UK oil and gas developments where investment is already committed, suggest that the full impact of the oil price is yet to be felt although respondents expressed their concern that future projects could be delayed or cancelled in the current economic climate’ reads the note.  

Oil & Gas UK put additional pressure on the British government, asking for actions on fiscal and regulatory reform, which were defined ‘essential’ measures for the next phase of development in the North Sea. 

Last December, the UK government confirmed its commitment to support the North Sea oil and gas industry, announcing a package of measures in its Autumn Statement to address the current problems.