December 8 2013 Latest news:
Ben Woods, Business writer
Thursday, August 22, 2013
A marked decline in oil and gas production in UK waters has sparked concern with energy leaders.
Despite fears about the fall in production, hopes remain high that local businesses can benefit from the recent record
investment in oil and gas exploration.
Last year, the supply chain made £20bn of sales from the UK continental shelf.
And with new tax reliefs kick-starting major exploration projects, firms in Norfolk and Suffolk are poised to reap further rewards this year.
Great Yarmouth energy services company Proserv is a prime example of a locally-based business – with an operation in Aberdeen – which has won a £10bn contract on the back of a project benefitting from the new tax allowances.
The firm will provide engineering, procurement, manufacture and testing of the sub-sea
control system for the Montrose Area Redevelopment near Scotland.
But while this business is welcome, a greater push is still needed from the region’s industry leaders and local
policymakers to ensure that more local companies benefit from the investment – and do not miss out to foreign firms.
Trade body Oil and Gas UK said significant investment had been made in North Sea exploration, but the efficiency of its current assets was “worrying”.
According to its latest economic report, investment had reached an all-time high of £13.5bn this year, with £6.5bn paid out in tax.
But while the UK remained the third largest producer of gas, annual production declined by 14.5pc last year, and 19pc the year before.
This meant production had declined by 30pc in the last two years – the lowest it has been since 1977.
Malcolm Webb, chief executive of Oil and Gas UK, said: “Despite impressive investment in new developments, the production efficiency of existing assets remains in worrying decline.
“The Department of Energy and Climate Change and industry are working to tackle this serious concern through a joint task group.
“The Wood Review, which is currently examining how to maximise UKCS recovery, is also very timely and we very much look forward to seeing the recommendations early in 2014.”
The government said oil and gas will provide 70pc of the UK’s primary energy in 2030. But only nine fields began producing in 2012, while 15 fields are expected to come onstream this year.
Mr Webb added: “The offshore oil and gas industry generates almost £40bn a year for the economy by producing oil and gas worth £32bn and by exporting oilfield technology and expertise worth £7bn.
“The recent sharpening of focus within government and industry on the business environment required to grow that contribution in future has given investors the confidence to develop new fields and redevelop older fields.
“This is heightening the business opportunities for the UK’s world-renowned supply chain and is boosting employment to 450,000 jobs across Britain.”
Two hundred jobs are set to be created after one of west Norfolk’s largest businesses was granted permission to expand its King’s Lynn facilities.