Stability needed to maintain upturn in oil

Paul Boughton

The oil and gas sector is likely to see a continued increase in activity in the coming year, according to results of a major survey announced.

The third Aberdeen & Grampian Chamber of Commerce oil and gas survey, sponsored by Deloitte and conducted by the Fraser of Allander Institute, shows an even more positive picture of North Sea activity than four months ago.

Business confidence continues to rise with both producers and contractors remaining optimistic about developments in the UK Continental Shelf (UKCS). There are even stronger signs of increased activity amongst operators and contractors reported increases in the volume of tenders and work.

“The most encouraging signs for the sector and the North-east are the forecasts for increased exploration, drilling, development and appraisal activity in the UKCS for the next 12 months,” says Derek Henderson, senior partner at Deloitte in Aberdeen.

“Coupled with the new energy minister’s hardline stance on the North Sea where he has pledged to revoke exploration licences if companies fail to develop their assets quickly enough, we should see even more activity which is good news for the industry but also for the many businesses which support it.”

Forty-five per cent of contractors reported increased UKCS based activity over the past four months and 40 per cent anticipate an increase on that in the next year.

While 68 per cent of contractors said that they were working at or above optimum levels in the North Sea, 70 per cent reported working at or above optimum levels overseas.
With a new term of government and a new energy minister in place, the survey asked specific questions relating to fiscal issues.

For the first time in any survey, the industry was asked for its views on a government ministry dedicated to energy. Views were also sought on the existing UK tax structure, potential changes to the fiscal regime and government policy moves that would be favoured.

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