But a closely-watched report out today claims significant assets changing hands and an increasing diversity of new ownership might be a shot in the arm for “badly needed investment” in the UK Continental Shelf.
Low levels of exploration and appraisal activity in the North Sea remain a “serious concern” with drilling at record lows, says trade body Oil & Gas UK’s Economic Report 2017, the annual look at the energy industry’s performance and outlook.
“The basin still needs further fresh capital investment, as only three new field approvals have been sanctioned since the start of 2016,” the report says.
“If activity does not pick up this could have further negative implications for jobs that could threaten core capabilities.” More than 300,000 UK jobs are still supported by the sector.
The report says that oil and gas market conditions remain tough, but there was evidence the sector was “reinventing itself” through efficiency gains, fiscal competitiveness and a strong supply chain.
Although investors still wanted more certainty over Brexit, Oil & Gas UK chief executive Deirdre Michie said: “We are transforming in a way that is getting UK oil and gas back in the game.
“We are increasingly being seen as a much more attractive basin in which to invest with further M&A [mergers and acquisitions] activity expected over the remainder of this year and into the next.
“Although we are getting to a much better place, we still need further investment to generate new activity and sustain hundreds of thousands of UK jobs.”
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The economic report was launched this morning after the start yesterday of Offshore Europe, a major industry conference and exhibition taking place this week in Aberdeen.
Oil & Gas UK said the challenge now was to ensure this renewed interest in the UK basin “translates into tangible activity that could help unlock £40bn worth of potential development opportunities known to be in company business plans”.
Brent crude oil is currently trading at about $53.50 a barrel. The price was $115 in summer 2014, and $27 in January 2016. Oil & Gas UK says companies have reacted by becoming more efficient and competitive – with the cost of lifting oil from the North Sea almost halving since 2014.
“This improvement to unit operating cost is greater than improvements achieved by any other basin,” the trade body adds. It says production has risen 16 per cent since 2014 driven by efficiency improvements, brownfield investment and new field start-ups.
“Changes to the tax regime have helped create one of the most competitive fiscal regimes for upstream investment globally,” the report said.