UK North Sea oil and gas sector affects contractors.
UK oil and gas news has been gloomy in recent times with the oil price struggling to stay above US$30 per barrel, and this may affect oil and gas contractors adversely.
About three months ago, Oil & Gas UK predicted that 79 platforms would shut by 2024. However, the UK’s oil and gas production is continuing at the same pace. The total oil production in the third quarter of 2015 increased by 7% year-on-year, and drilling activities are currently stable; but the industry is reacting to the falling oil prices by cutting jobs and reducing capital expenditure.
One of the main problems affecting the UK oil and gas industry is the high operating costs in the North Sea. It costs about £17 to extract one barrel of oil – this is one of the highest operating costs in the world. While the UK industry is striving hard to reduce its cost to £15 per barrel by the end of 2016, this reduction in operating costs may not be enough to keep the industry going.
Many oil and gas consultancies believe the ageing UK platforms are economically unviable at the current gas prices because they require high maintenance and expensive oil extraction techniques. The effects of this are already being felt, with the Wood Group PSN (WGPSN) announcing at the end of last week that it is reducing the rates paid to oil and gas contractors by 9%.
This will affect approximately 600 oil and gas contractors associated with WGPSN in the UK. WGPSN Managing Director UK and Africa James Crawford said the company had made this decision to overcome the continuing cost and efficiency challenges that were affecting the North Sea oil and gas sector.
This latest adjustment in the rate to oil and gas contractors will affect about 600 contractors, and comes after a 10% reduction in the onshore contractors’ rate in May 2014. In December 2014, WGPSN had reduced the contractors’ rates by 10%.
SOLO Platinum can offer oil and gas contractors payroll solutions to retain more of your contract’s value, helping to maximise your income to combat any contract reductions that may have affected you.