LONDON – Optimism in the UK oil and gas industry plummeted during 4Q 2014, according to Oil & Gas UK’s Business Sentiment Index.
The decline – down 16 points to -23 points on a -50/+50 scale – continues the downward trend seen of the previous seven quarters.
Operations director Oonagh Werngren said: “Unsurprisingly figures published today reveal serious concerns within the industry in light of the very real problems which face the UK continental shelf (UKCS), including rising operational costs and a substantial drop in production efficiency. These existing problems, apparent even when the oil price was above $100/bbl, have been exacerbated by the recent fall in oil price.”
Many respondents of the survey said the combination of the low oil price and operating in a high cost, mature basin would have an increasingly negative impact on their future activity levels.
Some companies have been reviewing their budgets for 2015 and the signs are that capital spending across the UK sector will drop.
Contractor companies working on UK oil and gas developments where investment is already committed suggested that the full impact of the oil price was still to come through. However, they were concerned that future projects could be delayed or canceled.
Werngren said: “The positive news is that there is a clear consensus that the industry must accelerate its efforts to address the costs and efficiency of its operations across the UK. Alongside this, urgent government action on fiscal and regulatory reform is essential to help secure the next phase of development in the North Sea.”