Production of oil and gas in the UK increased by 10.4% last year for the first time in 15 years.
That was due to a series of new projects in the North Sea as well as development of technological innovations to maximise extraction from existing fields, according to Oil & Gas UK’s latest report.
However, the industry body has also warned exploration has fallen to record lows as a response to low energy prices and low investment.
It forecasts a drop in investment from a record £14.8 billion in 2014 to around £9 billion this year. That’s despite operating costs for offshore producers falling by 45% in the past two years and lowering the average cost of extracting a barrel of oil or gas from more than $29 (£22.3) in 2014 to $16 (£12.3) this year.
The group is calling on the government to “vigorously champion” investment in the UK Continental Shelf (UKCS) as its supply chain has seen an average 30% fall in revenues and around 120,000 jobs are said to have been lost in the past two years.
Deirdre Michie, Oil & Gas UK’s Chief Executive said: “The UKCS is in urgent need of fresh investment to boost exploration and drive activity, particularly for the supply chain.
“Exploration has fallen to record lows and little new investment has been approved in 2016 and 2017 looks no better. Increased asset trading is one area that could free up new investment by facilitating the trading of late-life assets. In light of this I am calling on governments today to vigorously champion the UK’s oil and gas industry, by providing certainty in our fiscal regime, encouraging new entrants to the market and recognising our supply chain as vitally important to the economy.”