New offshore developments bring positive news for the Oil & Gas sector

There is positive news today for the future of Scotland's oil and gas business, which will give a major boost to the north-east economy.

Industry body Oil & Gas UK said up to 16 offshore developments could get the go-ahead this year - more than the last three years combined.

The international oil and gas business has been through a tough time in recent years following the plunge in the price of crude, but there are increasing signs that the North Sea's fortunes are on the upturn.

Aberdeen is the oil capital of Europe, and it suffered badly from the industry slump which has led to significant job losses locally.

Posts unfortunately continue to go - only yesterday, energy group Total confirmed around 250 workers could be made redundant in the north-east following its takeover of Maersk Oil.

Recovery

But, generally, things are beginning to bounce back - and many firms are expecting employee numbers to begin rising again this year.

Oil & Gas UK said the new developments in British waters are expected to unlock investment of around £5billion.

The industry body's business outlook report out today provides the most up-to-date picture of the basin's performance and future. 

While the project landscape for 2018 is the healthiest the industry has seen since 2013, greater exploration success and maximising the potential of existing assets are essential for the future, says Oil & Gas UK.

Chief executive Deirdre Michie said: “Our sector is leaner, more efficient and more optimistic than it has been in recent years and 2018 looks set to be a better year.

“What we have learned in our response to the downturn has made us better equipped to tackle the ongoing challenge of maximising production for the longer term and boosting profitability in the supply chain - but without increasing overall project costs or damaging competitiveness. Our remarkable resilience owes a great deal to the ingenuity and innovation of our people.

“More projects are taking place and investment is happening because of the sweeping changes made to adapt to the challenging business climate. This has helped make the UK continental shelf (UKCS) one of the most attractive mature basins in the world in which to do business and we will continue to work hard to maintain our competitive advantage.”

Employment is also looking more optimistic following significant job losses since the oil price slump and downturn, according to the report which underlines that over 300,000 people still work in and support the sector across the UK.

More than half of companies surveyed expect employee numbers to rise this year. But some businesses are also reporting difficulties in recruiting people with certain skills and competencies, prompting a number to make refinements to trainee and apprentice schemes.

Challenges ahead

However, the chief executive added that many areas of the oil and gas supply chain are still struggling with the impact of the downturn and have yet to benefit from any upturn in activity.

She said: “It’s vital that we keep driving fresh thinking, innovative approaches and efficiency efforts. The short-term outlook for our sector is more positive with new projects and new entrants bringing new life to the basin, but there are undoubtedly longer-term challenges. 

“We need more exploration if we are to get close to recovering the up to nine billion barrels of yet-to-find hydrocarbons on the UKCS, matched by a continuing focus on improving recovery from existing fields. The investment decisions we make today are key to how much we produce in the years to come.

“Oil and gas remain a vital part of the UK economy and will form most of our primary energy needs for many years to come."