Oil sector ‘needs a sea change’

THE North Sea energy sector needs a shake-up within the next two years to survive, finance experts warn.

They say there is life in crisishit oil and gas for years to come if the industry and state agree a blueprint for change, taking lessons from countries such as Norway.

The report by accounting giant PwC is based on interviews with more than 30 senior figures from the UK, the Norwegian energy fields and the Netherlands.

Industry body Oil and Gas UK has warned of up to 1 0,000 job losses in the next two years because of the plunge in oil prices. Despite the grim outlook, the industry interviews revealed ‘significant optimism’ that the North Sea, given the right strategy, can continue to provide a few more decades of production.

Alison Baker, of PwC, said: ‘We picked up a real sense of urgency to create one last cycle of success that will retain and generate jobs, stimulate growth and ensure security of energy supply.

‘But this was matched by a level of frustration at the fundamental issues that need tackling to avert the risk of rapid and premature decline.’

The report, entitled A Sea Change, found the majority interviewed want government to learn from Norway and Saudi Arabia, and be bold in setting out their plan. Ms Baker added: ‘This must incorporate onshore activity as well as defining how the North Sea will evolve in the short to mediumterm and, crucially, how the end game and subsequent transition to a low carbon landscape will be managed.’

PwC senior partner in Aberdeen, Kevin Reynard, said: ‘The North Sea still has a strong couple of decades ahead of it.

‘But the decisions to sustain it in that period need to be taken quickly. No one company standing alone can weather this, but if all interested parties join forces to address the issues then there is hope for the North Sea. Government and industry have started to come together but this can be built on for the future.’

Economy Secretary Keith Brown said: ‘This report supports our firm view that the North Sea continues to represent a huge opportunity for Scotland, with many billions of barrels of oil reserves still to be recovered. And it is heartening that this optimism is shared by industry leaders.

‘While we are doing everything within our current powers to support the sector, the UK Government retains control of the main economic levers.

‘That is why we continue to press it to deliver on its commitment to use the UK Loan Guarantees Scheme to secure new investment in oil and gas infrastructure.’

WWF Scotland director Lang Banks said: ‘Our economy will continue to rely on oil and gas for some time, but PwC are absolutely right to highlight the need to prepare for the inevitable transition to a zero carbon future.’

‘If we join forces there is hope’