A report examining the UK’s oilfield services (OFS) sector published today has been hailed as a “welcome reminder” of the need for industry to continue to collaborate.
EY has unveiled its review of the sector, saying it experienced another “challenging” year in 2017 including its third consecutive annual drop in turnover.
The report found that income was in fact down by 9 per cent in the year to £26.9 billion, with reductions across each of the supply chain categories. Turnover had clocked in at £34.8bn in 2015.
The sector also saw its core earnings margin fall by 2.2 per cent, the largest fall since the sector downturn in 2014.
Derek Leith, EY partner and head of oil and gas tax, said further concerns over global economic growth, the demand for crude, and the ability for the Organisation of the Petroleum Exporting Countries and others to achieve demand/supply balance has seen a tight focus on cost control and capital spend squeeze OFS margin.
He added that the OFS sector has probably come through the bottom of the cycle in 2017, but the strategy for the sector remains roughly the same.
This includes a focus on competitive advantage and having a clear commitment to technological innovation aligned with the agendas of exploration and production companies. “And of course, focus on people by attracting and retaining the right level of talent”.
Oil & Gas UK, the representative body for the UK’s offshore oil and gas industry, said the report “is a welcome reminder of the need for industry to continue to work together to realise its full potential”.
OGUK supply chain director Matt Abraham said the UK’s OFS sector faces continued pressures. But he added that the UK’s oil and gas supply chain has an excellent opportunity to capitalise on its competitive advantage in offering full lifecycle services “with a reputation to match”.