Oil and gas contractors and companies have been feeling the heat due to the tumbling oil price and the reduction in demand since developed economies have been making a concerted effort to reduce carbon fuels. This has taken a toll on the oil and gas industry, and especially the North Sea oil industry.
However, analysts now believe that the North Sea oil industry has two years to fix the basic problems that it has been experiencing; otherwise, it will spiral into a quick and early decline and will not be able to emerge from it.
PricewaterhouseCoopers (PwC) has published a new report that claims that the North Sea oil industry is presently at a crossroads, and any chance of making changes and amends is reducing by the day. While the industry has taken definitive steps to cut costs, PwC analysts believe that the industry’s future is at stake due to a lack of leadership and innovation, and persistent red tape.
PwC stated that the recent increase in oil price will not resolve the long-term issues plaguing the North Sea. Hence, oil and gas contractors and companies should create plans to address the various fundamental issues.
By the end of 2016, about 120,000 jobs in the UK’s oil and gas industry are expected to be lost. The analysts pointed out that the UK Government has taken measures to support operators that are in the process of decommissioning. This will help smaller oil and gas operators tremendously.
However, it is still not clear who will be responsible for retiring the assets in the North Sea. The Government has to make it clear if it will be the large oil and gas firms that own them or the smaller companies that benefit from them. This lack of clarity has adversely affected decommissioning.
Nonetheless, the PwC report claims that the future of the North Sea oil industry is not as bleak as many believe. It still has the potential to produce up to 30 billion barrels, but first the challenges have to be addressed quickly and earnestly.