North Sea oil and gas investment stalls

A semisub rig in the North Sea. Photo courtesy of Transocean Ltd
A semisub rig in the North Sea. Photo courtesy of Transocean Ltd

North Sea oil and gas investment has stalled against a background of legislative uncertainty with only seven exploration and appraisal wells spudded in the UK sector in the second quarter compared to 12 in the first three months of 2014.

 

Oil companies are adopting a ‘wait and see’ approach ahead of changes being ushered in by the recent Wood report, changes to the taxation regime and the creation of the new Oil and Gas Authority, says a report from business advisory group Deloitte.

 

Derek Henderson, senior partner in Deloitte’s Aberdeen office, said: “There were many recommendations made in Sir Ian Wood’s final report, and it’s likely that the industry could be pausing until it has a better understanding of the impact of these, and the effect on the long term future of the North Sea, before making any big investment decisions.”

 

The tax environment is a factor that bears heavily on the decisions of all oil and gas companies, with corporate tax rates that can reach 81%.

 

The number of wells spudded is ten fewer than the same time last year and the lowest since Deloitte started its North West Europe Petroleum Services Group report ten years ago. Similar falls in exploration activity are reported in the Norwegian and Netherlands sectors of the North Sea.

 

Trying to control escalating costs of oil extraction is also part of the reason for the slowdown, says Deloitte, as field developers were spending five times as much to extract a barrel of oil than in 2001. Partly this is because more technically challenging and difficult to reach areas are being exploited.

 

The number of deals completed in the quarter also fell, with only five in total compared to ten in the previous quarter, and seven fewer than in the same quarter last year.

Please rate

Comments 

Ctrl + Enter

Most Read

How candidates can approach recruiters and land that job!

How candidates can approach recruiters and land that job!

If you go to a career fair, there are bound to be tons of recruiters and eager students vying for limited positions. However, the big question is, how do you stand out from the other multitude of job seekers?   It is true that not everybody is great at networking and not everybody knows how

How to make giant strides in the water industry

How to make giant strides in the water industry

A cumulative total of 44 billion pounds will reportedly be spent by water companies in England and Wales over a management period that spans over a five-year period up till 2020. It is expected that midway through this management period; several water companies would have enough capital to execute

This website uses cookies to enhance your user experience. By continuing to use this site, you consent to our use of these cookies. See our Cookie Policy.