OGA must be ready to apply ‘use it or lose it’ powers

Sir Ian Wood
Sir Ian Wood
Opinion by Sir Ian Wood

The reduced oil price over the last 2 months (down 20%) is worrying, and it looks like the price could be between $55 and $65 this year.

This should still enable the slow but sure improvement in activity and investment this year to continue.

The market is very active and a lot of deals are being discussed to take assets into hands that will develop them.

The bigger oil operators are all in good shape and investing, and there will be a number of new players.

Although there’s still a long way to go, we are seeing better operator collaboration which will enable more developments.

The 12 projects instigated this year were more than the last three years combined and that is encouraging.

The greatly increased focus on technology with OGTC and OGA working closely together on this must also be positive.

However, some parts of our supply chain continue to struggle badly.  We must try and maintain the efficiencies and cost reductions that have been hard won in the last two years, and we must increasingly focus overall on value as opposed to cost contracts.

This requires much closer collaboration between the supply chain and the operators with added value R&D to create win win for the operators and the supply chain achieving a much more acceptable margin.

I believe OGA are doing a very good job, but they must be prepared next year to apply their powers to “use it or lose it”, strongly encourage more collaboration and try and stimulate more exploration drilling.