The oil sector’s efforts to make the North Sea more competitive will be “irreversibly damaged” without an influx of new investment, an industry expert said today.
Adam Davey, market intelligence manager at Oil and Gas UK (OGUK), said the North Sea “urgently” needed more capital expenditure and that the supply chain was reliant on new projects for work.
And with few new offshore developments being sanctioned, there is a risk that suppliers will move away from the basin, Mr Davey warned.
“Once they’re gone, it won’t be easy to attract them back,” Mr Davey said at OGUK’s launch of its economic report at Offshore Europe 2017.
Mr Davey said most investment in the North Sea was the “legacy of old field approvals”, while the basin is line for its worst year on record for exploration.
Mr Davey said the sector could not “tolerate many more years of such limited investment”.
The economic report said North Sea companies had £40billion worth of potential development opportunities in their business plans.
Mr Davey, who wrote the report, said industry’s “good work” would be “irreversibly damaged” if part of that investment does not start coming through.
Mr Davey also said the North Sea was the most expensive basin in which to operate globally.
But he said the UK had become a much more attractive place to invest in recent years and he is confident there will be more field approvals in the next few years.
He said: “There are opportunities and we need to unlock them. We’re well along the path.”
Wood Group chief executive Robin Watson said the decline in investment in recent years had been “profound”.
Mr Watson also said the “skill migration” away from the North Sea had been stark.
He said: “Many people won’t return and we are a less attractive career proposition for young people. We should be concerned and thoughtful about that.”
Mr Watson did say North Sea industry had responded to its challenges.
But he said the sector still had a “mixed scorecard” and needed to start making different types of improvements.