The North Sea oil and gas industry needs to “significantly” reduce costs by billions of pounds to remain competitive, a report has warned.
Professional services firm PwC said “a new vision and new ways of working are urgently required” for the sector.
It argued it is “essential” that companies operating in the North Sea work together and collaborate, stating that this would help the industry to “plan more effectively and further into the future”.
It also said the industry needed to grasp the “rich source of opportunity” that decommissioning offers, saying this could be worth about £35 billion.
Meanwhile the UK government needs to provide “strategic clarity” on taxation, with PwC’s latest Northern Lights report warning a “lack of fiscal stability” risks damaging business.
Kevin Reynard, PwC’s office senior partner in Aberdeen, said: “It’s vital that we take a more strategic and integrated view to help extend the life of the North Sea – for everyone involved and for future generations. If we choose not to change, then we risk sleep-walking into an early sunset. It’s time to get started if we want to secure a vibrant UK North Sea for the next 40 years.”
The report calls for a broad strategic framework to be developed for the industry to “create certainty under the auspices of a new independent regulator”, as proposed by Sir Ian Wood’s review of the oil and gas sector.
Increasing costs were a “defining feature of the UK North Sea”, with the report warning these are “likely to rise still further” as firms try to extract the remaining oil and gas reserves.