LONDON: Oil & Gas UK reports revenue from production in UK waters fell by £24 billion last year due to a collapse in global oil prices.
According to Oil & Gas UK’s 2015 Activity Survey, the decline in revenue was “the lowest since 1998”, despite production having dipped just one per cent on the previous year to average 1.42 million barrels a day.
If the challenge facing our industry was significant when oil was at $110 per barrel, the scale of the issue has greatly escalated with the oil price collapse.
Oil & Gas UK, which is currently lobbying government to introduce further tax breaks to help the industry, said while capital investment in the UK Continental Shelf (UKCS) reached £14.4 billion last year – surpassing the ‘record’ £14.4 billion spent in 2013 – total expenditure plus taxes was £29.7 billion.
The bulk of investment growth in the 2013 and 2014 years was led by a raft of generous tax breaks introduced in 2012 Budget which had served to drive up confidence in the sector and interest in development in UK waters hit a 10-year high as a result.
However, according to a recent report from Deloitte’s Petroleum Services Group, the number of wells exploration and appraisal wells drilled in UK waters falling to a 15 year low in 2014 with 40 wells drilled, and down 47 per cent against the 10-year average.