Action is required within a shrinking window of opportunity to safeguard a “strong, productive and profitable” future for the North Sea oil and gas industry, according to a report published today .
Accountancy giant PwC found in the study titled A Sea Change that 58 per cent of senior executives in the sector across the UK, Norway and Holland felt positive about the future of the North Sea basin.
However, it emphasised that the two-year “transformation window” is closing slowly and “any inertia at this pivotal moment could lead to decline at an exponential rate”.
The global firm acknowledged success in addressing issues like cost efficiency and carrying out recommendations from the 2014 Wood Review covering oil and gas recovery in the UK Continental Shelf, but it stressed the need to establish a “robust roadmap” backed by the industry as well as government and regulatory body the Oil and Gas Authority (OGA).
Alison Baker, PwC’s oil and gas leader for the UK, Europe, Middle East and Africa, explained: “During our interviews we picked up a real sense of urgency to create one last cycle of success that will retain and generate jobs, stimulate growth and ensure security of energy supply.
“But this was matched by a level of frustration at the fundamental issues that need tackling to avert the risk of rapid and premature decline.
“Part of the solution is for government agendas across Treasury, the Department of Energy & Climate Change and the OGA to be much better aligned to the needs of the whole industry, from super majors to smaller oil field services firms.
“The majority of respondents also want government to take a lesson from Norway and Saudi Arabia and be bold in setting out their blueprint for the future.
“This must incorporate onshore activity as well as defining how the North Sea basin will evolve in the short to medium term and, crucially, how the end game — and subsequent transition to a low-carbon landscape — will be managed.”
Among suggestions in the report were a government-backed decommissioning fund or equity-backed guarantee scheme, which would enable independent firms to “focus on squeezing the last drops of oil and gas from the basin”.
Also highlighted was the need for a “new, innovative” leadership style in the industry, but balanced with wisdom and experience.
Kevin Reynard, PwC office senior partner in Aberdeen, added: “The North Sea still has a strong couple of decades ahead of it, but the decisions to sustain it in that period need to be taken quickly.
“It’s vital that governments and industry come together and agree a blueprint for action. No-one company standing alone can weather this, but if all interested parties join forces to address the issues then there is hope for the North Sea.”