North Sea Confidence At “Record Low” – AGCC

Published at 09:21AM - 11/06/15

A recently published survey by the Aberdeen and Grampian Chamber of Commerce found confidence among contractors operating within the North Sea offshore energy industry to be at a record low.

The 22nd oil and gas survey to be conducted by Aberdeen and Grampian Chamber of Commerce (AGCC), found a mere 21% of contractors surveyed were working at a level that could be described as optimum or above.  This comes as a noticeable markdown from the previous survey by the AGCC, in which the same question gave a result of 47%.

The main feeling of concern from contractors surveyed was the current and future price of oil.   

The survey had found that since the drop in oil prices, two thirds of operators had cancelled planned projects within UK waters.  This has had a huge knock on effect. 

The survey comes as UK based accountancy firm Moore Stephens published a report at the end of last year claiming the number of insolvencies within the UK offshore oil and gas industry had trebled.  Also around the same time, financial risk management firm, Company Watch, also published a report in which it claimed 70pc of the UK’s publicly listed oil and gas exploration and production companies were unprofitable, with losses at that time, in the region of £1.8bn.

The only positive from the survey was the marked increase of contracts gained within decommissioning, a twist that is brings increased work in the short term, but an end to offshore contracts in the long term.

One of the major problems cited by the contractors surveyed, was the tax regulations that go hand in hand with operating within the UKCS and the toughness of getting access to capital.

The UK Chancellor George Osbourne, gave the UK offshore oil and gas industry large tax incentives in the last UK budget, also simplifying the tax law around exploring and producing in the UK North Sea.  Some in and around the industry, still believe these don’t go far enough.