A report issued today by Oil & Gas UK calls out for the new of fresh investment in the UK Continental Shelf (UKCS) to maintain its competitive environment.
According to Oil & Gas UK’s Economic Report 2016, industry efficiencies are driving a 45% decrease in the cost of extracting a barrel of oil or gas from the UKCS, but major challenges remain.
“The UKCS is in urgent need of fresh investment to boost exploration and drive activity, particularly for the supply chain,” Oil & Gas UK’s Chief Executive, Deirdre Michie, said.
UK Continental Shelf Exploration Hits Record Low
“Exploration has fallen to record lows and little new investment has been approved in 2016 and 2017 looks no better,” she added.
Nevertheless, production has gone up by 10.4% in 2015, the first increase in 15 years, the report adds.
Still, the record low exploration and the lack of capital investment show there is still a lot of work to be done for the UKCS to get back on track.
Revenues in the supply chain have seen a 30% decrease since 2014 and jobs continue to be shed across the industries, with approximately 120,000 expected to have been lost over the past two years.
Oil & Gas UK Urges Promotion of the UKCS
“In light of this, I am calling on governments today 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 CEO added.
To this effect, Oil & Gas UK announced it will ask the UK government to commit a more competitive, simple and predictable fiscal regime for the UKCS; to enable tax relief to facilitate the trading of assets; and to promote the increasing competitiveness of the basin as well as the capabilities of the UK’s oil and gas supply chain.