Reducing operating costs and improving efficiency are key to attracting investment in the UK oil and gas sector.
Investment in the UK Continental Shelf (UKCS) is expected to fall by around £2 billion to £4 billion per year, according to a new report.
That’s from £14.8 billion last year, the highest amount of investment for the fourth successive year, Oil & Gas UK revealed.
For new developments, investment is expected to average £3 billion to £4 billion per year in 2016-2017 compared to almost £10 billion annually from 2011 to 2013.
The cost of operating the UKCS rose by around 9% to £9.7 billion in 2014 as a result of a decline in production.
However this figure could fall by 22% by the end of next year if there are cost and efficiency improvements, the report said.
Adam Davey, Economics and Market Intelligence Manager at Oil & Gas UK told ELN that while lower oil prices have affected the sector in the country, some of the problems that exist “are more structural”.
He added: “The single biggest thing that we can do is to improve efficiency. There’s probably three key areas: standardisation is certainly one way that we are able to achieve this but I think we probably need to look further than that and actually looking at some of the company cultures that exist from some of the big players in the UKCS.
“I think that behaviours where the shutters come down and companies don’t talk to each other and co-operate need to change and I think the Oil and Gas Authority will have a big role in ensuring there is a collaborative future for the UKCS and that companies work together.”
Earlier this month, Oil & Gas UK launched a task force to make the sector more competitive and increase economy recovery.
The UKCS provides just over 50% of the country’s oil and gas demand.