UK must adapt to lower oil price, says Michie

Offshore staff

ABERDEEN, UK – Oil & Gas UK CEO Deirdre Michie said the UK offshore oil and gas industry must become sustainable “in a world of $60 oil.”

Speaking earlier this week at the association’s annual conference, she explained:  “Over the last 20 years, the price has averaged at $62 per barrel and the forward curve is between $65 and $75. Therefore it is not unreasonable for the North Sea to set out its stall at being sustainable in a $60 world.

“As a target, it’s one that we as a trade association can champion, government can align with and the [new UK offshore] regulator can pursue as an enabler, for example, to focus on key infrastructure.”

To succeed, she added, the UK offshore sector must be open to change. “We must avoid doing the same things in the same way and expecting a different outcome. We have had a decade of escalating costs, so we can be sure that our current approach doesn’t work.

“We need to think about this from an investor’s point of view. Given that we compete for investment dollars on a global basis, we must ensure the UK is a commercially attractive and predictable place in which to invest.  

“Learning from our mistakes, we know that our focus cannot merely be on ‘cutting costs,’ but must more fundamentally address the efficiency of the basin. Focusing on efficiency means that, if or when the oil price bounces back, we will be best placed to seize new opportunities.”

06/19/2015

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