Latest Oil and Gas UK report shows offshore industry increasingly pessimistic
31 October 2014
The Q3 2014 Oil & Gas UK Business Sentiment Index published on October 30 shows that optimism in the sector continues to decline with a drop from two points above zero on the -50 to +50 index to seven points below zero. While there are still some companies expressing optimism, the majority of survey respondents cite rising costs, a reduction in drilling and the drop in oil price among factors curbing optimism.
Published quarterly, the index captures a snapshot of the industry mood and gauges a number of economic indicators, including business confidence, activity levels, business revenue, investment and employment with a higher rating (above zero) indicating a more positive outlook and a lower rating (below zero) expressing a more negative opinion.
Oonagh Werngren, Oil & Gas UK’s operations director, said: “Over the last six quarters, there has been a marked trend towards declining optimism in the sector but this is the first time the overall index has moved into negative territory since 2009.
“In recent months, the North Sea oil and gas industry has been considering the implications of a falling oil price which makes it harder to attract new investment. Many of our survey respondents expressed concern over future activity levels, which have not been helped by rising costs.
“The industry urgently awaits an announcement on the 28th Licensing Round, the appointment of the new chief executive officer of the Oil and Gas Authority and the outcome of the Treasury’s fiscal review to ensure that the basin remains competitive on a global basis. Together, answers on these should help boost confidence in the UK Continental Shelf (UKCS).
“Ahead of the announcement of the CEO for the new Oil and Gas Authority, the industry has been working with the Department of Energy and Climate Change (DECC) to implement some of the key recommendations of the Wood Report aimed at maximising recovery from the UKCS. This will help deliver both opportunity and certainty in the UKCS which, despite the current pessimism, last year saw capital investment reach £14.4 billion – its highest in three decades.”