According to recent findings from consultancy Deloitte, gas and oil operators working in the UK North Sea look set to bide their time when it comes to fresh investment decisions, until the future of the UK industry becomes clearer.
Deloitte released its latest report for Q3, and found that only 4 UK offshore deals were completed in the period, which represented a significant decrease from the same period in 2013, when 14 deals were closed.
Deloitte’s senior partner in the Aberdeen office, Derek Henderson, said that the decrease in deal closures was possibly due to operators waiting for better clarity with regards to the UKCS and its potential future.
He explained that the oil and gas industry was pausing to see how the UK North Sea would change going forwards, with the UKCS entering a transitional phase amongst a broader context of change. Corporate boards and more risk-averse investors will be keen to see clarity and certainty of direction before parting with their cash assets for new projects.
A significant number of UK North Sea assets are already on sale in the open market from some large operators. Smaller firms and those with less expansive budgets are typical buyers, which is likely to stall deals by creating market price differentials.
The next big milestone will be the Chancellor’s budget statement for autumn, and the industry will be seeking out positive measures which aid operations in the mature UKCS basin. Key wins for the industry would be a more predictable fiscal regime, combined with a lesser tax burden to boost investor confidence once again.