North Sea oil and gas industry facing ‘challenging times’

Oil and Gas UK, the representative body of the energy industry, has said the North Sea oil and gas industry is facing “challenging times” ahead.

The body’s chief executive has called for continued efforts to improve co-operation between companies operating in the North Sea and reduce costs in the sector.

The Oil and Gas Authority (OGA) has said it recognises the need for change in the sector and “is working with industry and government as a catalyst for this change”.

The OGA recently published a report titled Call to Action: Six months on, which states in the introduction: “We should be in no doubt about the scale of the challenge ahead but it is important that we recognise the progress that has been made over the past six months and remain focused on the things that matter most as we look forward.”

It comes as experts predict further consolidation in the oil services sector, following reports this week that energy services company Proserv has acquired offshore communications specialist Nautronix for an undisclosed sum.

Proserv chief executive David Lamont said of the deal: “Individually, the two companies have been doing well in these more demanding times; together, however, we are much stronger.”

Deirdre Michie, chief executive of Oil and Gas UK, said: “The industry is facing challenging times and the OGA’s drive towards co-operation between companies, improved stewardship of Britain’s oil and gas reserves and faster licensing process will help deliver the transformational change that is required to create a sustainable business in a world of lower oil prices.

“The sector has made a great economic contribution – having delivered production of 43 billion barrels of oil equivalent (boe), paid over £330 billion in tax to date and supported hundreds of thousands of skilled jobs – and huge potential remains with over 20 billion boe remaining to be extracted.

“Alongside Treasury’s work to restructure the tax regime and the industry’s focus on increasing efficiency and reducing costs, the OGA’s work is crucial to the success of tri-partite approach to maximising recovery of the UK’s oil and gas and we welcome the opportunity to work with OGA to help shape the industry’s future.”