‘Urgent’ investment needed to boost North Sea oil and gas industry

The North Sea’s oil and gas industry is experiencing a recovery in production levels, but a new report claims investment is urgently needed.

The annual economic report from industry body Oil & Gas UK has highlighted how the effect of plummeting oil prices has been felt particularly hard by those relying on the industry.

Revenues are set to decline by 31% over the two years to December 2016 due to oil and gas firms scaling back investment.

The bulk of that loss, according to Oil & Gas UK, will be in 2016.

Further, the report said that firms are in a position to “survive and succeed” over the long term at $50 for each barrel of Brent crude oil. Current prices sit just below that figure, compared to a low of $28 at the start of 2016 and a high of $115 two years ago.

Data places the number of jobs lost in the industry between 2014 and 2016 at around 120k.

Last month, Bdaily reported that Scotland’s revenues from North Sea oil and gas dropped by 97% in the last financial year, falling from £1.8bn to just £60m.

In the 2008/09 year, Scotland raked in £11.6bn from the industry.

Exploration for new oil and gas is down, but the Oil & Gas UK report said production is up 10% and extraction costs have been slashed by 45% since 2014.

According to Sky News, Oil & Gas UK chief exec Deirdre Michie said: “The UKCS (UK Continental Shelf) is in urgent need of fresh investment to boost exploration and drive activity, particularly for the supply chain.

“Exploration has fallen to record lows and little new investment has been approved in 2016, and 2017 looks no better.”

She added: “Increased asset trading is one area that could free up new investment by facilitating the trading of late-life assets.”

Paul Wheelhouse, the Scottish Energy Minister, said: “While we have received assurances from the UK Government we have yet to see any details, despite the urgency around this issue highlighted by the report.”