Office for National Statistics (ONS) showing the continuing serious decline in profitability of the UK oil and gas industry, Oil & Gas UK’s chief executive, Malcolm Webb, commented: “These shocking figures underline the very serious challenges the sector faces. After more than a decade of spiralling costs, over-taxation and weak regulation, the UK offshore oil and gas industry is now bottom of the league in terms of the cost of producing a barrel of oil and gas.
The UK’s difficulties have been greatly exacerbated by the sudden drop in oil price but it would be a grave mistake to believe that the price fall is the cause of the problem. A recovery in the price, even to $100 per barrel, would not resolve matters.
“The restructuring of the tax regime announced by the Government in the Budget and the establishment of the Oil and Gas Authority can encourage the much-needed future investment. However, unless the underlying cost and efficiency challenge is first tackled and overcome, the productive future of the UK North Sea will be severely constrained and there will be a very much smaller industry to tax, regulate and invest in.
All companies are now working hard to address the cost base and to improve the efficiency of their operations. This is very important work because we need to see a 40 per cent improvement in unit operating costs if we are to secure jobs and investment for the medium and longer-term.”
To view ONS figures, CLICK HERE