Call for investment in UK oil and gas

The UK’s oil and gas industry has become more competitive but needs fresh investment, according to the trade’s representative organisation.

Oil & Gas UK’s Economic Report 2016 says industry efficiencies are driving a 45% drop in the cost of extracting a barrel of oil or gas from the UK Continental Shelf.

Production was up by 10.4% in 2015, the first increase in 15 years, but major challenges remain, with record low exploration and a lack of capital investment

The trade body said the industry had showed tenacity over the last 18 months despite difficult market conditions.

It had almost halved the cost of extracting a barrel of oil or gas since 2014 and achieved a 10% increase in production.

The supply chain has seen an average 30% fall in revenues since 2014, however, and ongoing job losses – some 120,000 over the past two years.

Deirdre Michie, Oil & Gas UK’s chief executive, said: “The UKCS 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.

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

“I am calling on governments to vigorously champion the UK’s oil and gas industry by providing certainty in our fiscal regime, encouraging new entrants to the market and recognising our supply chain as vitally important to the economy.

“The evidence in the report demonstrates what our industry can achieve when the basin’s competitiveness is addressed and the tax regime reformed.”

Deirdre Michie wants more investment in the industry