Oil and gas companies were urged yesterday to avoid any kneejerk reaction to big movements in the oil price.
Bob Keiller, chief executive of Aberdeen-based international energy service company PSN, was speaking at Oil & Gas UK’s first supply-chain conference.
He told the event at Aberdeen Exhibition and Conference Centre that oil and gas operators should avoid a kneejerk reaction to recent swings in the oil price, which is currently standing at $52 a barrel for Brent crude.
Mr Keiller added: “You all argued that $147 oil was a short-term aberration and that investment plans were based on much lower thresholds – if that is the case, there is no rational need to cut back on investments when almost every reputable authority sees the oil price recovering in the medium term.
“Cutting back now will store up problems for the future.”
The chief executive also urged operators to use the UK supply chain.
He said doing this helped the overall economy and delivered an estimated £5billion-£6billion a year to the Exchequer.
“If you buy from overseas, this benefit leaks out of the UK,” added Mr Keiller.
He also outlined challenges facing the supply chain. These included persuading operators to use new technology, the issue of safety, plus creating additional numbers of skilled people.
Mr Keiller said cost was also a challenge.
“Costs in the UK have risen dramatically, with rig rates and other costs rising hugely.
“For the long-term sustainability of the basin, we need to control costs and keep pointing out to our customers how their behaviours may be driving costs in the wrong direction. Mr Keiller also said competition was necessary and healthy, but not if it drove up costs, removed the capacity for investment in people or technologies, or introduced waste.
On the subject of opportunities, he said the amount of expenditure on the UK continental shelf had been estimated at more than £50billion over the next seven years.
“As always, most of this spend will be with the supply chain. So a major opportunity for companies in the UK supply chain is to stick around and keep servicing the UK market. Keep your assets, people and equipment in the UK,” added Mr Keiller.
Meanwhile, Scottish Secretary Jim Murphy told the conference that everyone recognised the role the offshore sector played in the UK economy and its world-class skills.
He added: “Today the UK Government has announced its shortage occupation lists for migrant workers following advice from the independent migration advisory committee, which includes a Scotland-specific list. It is important the (oil and gas) industry has flexibility and a fair playing field when it comes to recruitment and retention, both from home and abroad.
“That is why I have asked SCDI (the Scottish Council for Development and Industry) to look into the issue with a range of partners across the industry and I look forward to seeing what they produce early next year. I also look forward to discussing the issue in detail with industry representatives.”