Member Article

Confidence rises in oil and gas industry

Confidence and improved stability are returning to the North Sea oil and gas drilling industry, according to the latest figures from Deloitte.

UK Continental Shelf (UKCS) said drilling had increased in the first three quarters of 2012, which is a 6% increase against the same period last year.

The firm’s North West Europe Review revealed that drilling levels are likely to overtake the total for 2011, and confidence in investment decisions is increasing.

Deals confirmed over oil and gas fields have risen by 5% in the UK, and approvals for field development has overtaken the number accepted in 2011 after HM Revenue and Customs introduced new field allowances.

Despite a fall in the number of exploration and appraisal wells being drilled in the last quarter, Deloitte insisted that the latest figures represent a much steadier fuels market.

Jenn Hazlehurst, the leading director for Deloitte’s North Energy and Resources team said: “While this quarter’s drilling activity showed a decrease when compared to Q2, cumulatively we can see 2012 eclipsing drilling activity in 2011.

“We’re still not seeing pre-recession levels of activity, but there’s a definite feeling of some confidence coming back to businesses operating in the UKCS,”

The number of start-ups in offshore oil and gas rose significantly in the third quarter of 2012, with seven new fields this year compared with five last year.

Ms Hazlehurst went on: “The Government’s efforts to stimulate activity through a series of tax relief schemes are starting to filter through and, along with a sustained high oil price, smaller and technically challenging fields continue to be a much more attractive investment proposition than might have otherwise been the case.

“A lot has been done to rebuild investment confidence after the North Sea tax imposed in 2010, which is being demonstrated in these encouraging figures.”

This was posted in Bdaily's Members' News section by Miranda Dobson .