Turnaround in UK’s oil and gas industry fortunes needs careful nurturing, says report

The latest Economic Update from the UK Offshore Operators Association entitled ‘Taking the long term view’ argues that the recovery in investment and E&P activity on the UK Continental Shelf will require careful management if it is to be sustained against global competition. We publish here a slightly edited version of the report which was published at the end of November 2005. The UK’s offshore oil and gas industry is taking the opportunity offered by the success of co-operative initiatives instigated by PILOT (industry/government forum chaired by the UK Energy Minister) and higher oil prices to raise investment levels. This investment can be seen in all areas of activity and will slow the rate of production decline, maximize recovery of existing reserves, increase tax revenues for the nation, and give the best chance of finding and producing the undiscovered reserves that remain. The recovery following the 2002 tax shock is almost complete and has been encouraged by several years of good government/industry co-operation, higher prices, and the anticipation of fiscal stability. Competition for investment capital, equipment, and skills from other oil and gas provinces around the world is growing as investment opportunities expand in lower cost areas with bigger prospects.