Upstream activity on the UK continental shelf is worth almost $88billion, a new report has found.
More than 190 major contracts have been awarded in the upstream sector since the beginning of 2010, with 136 still under development or proposed.
The figures come just days after the Oil & Gas UK report on North Sea finances, which predicted record investment for the UK shelf this year.
Investment on the UK shelf is currently worth a potential $87.8billion and, despite a decline in the number of contracts in the last year, the report from the Energy Industries Council indicates the medium to long term future of projects on the UKCS remains strong.
BP have been the strongest company operating on the North Sea, with 31 major contracts in the last three years – including 13 EPC and 13 SURF. More than a dozen of the company’s contracts in recent years have been tied to the Schiehallion or Clair expansion projects.
Nexen, bought out by CNOOC in an $18billion deal earlier this year, follows as the second busiest, issuing 18 contracts – primarily focused on the Golden Eagle area development.
The biggest beneficiary of North Sea work in the last threeyears has been Technip, which picked up 23 projects from 16 different operators on the UK Continental Shelf, although Subsea 7 has shown the strongest performance so far in 2013.
But while European-based companies have shown the strongest performance, the Energy Industries Council, which was behind the new report, said it expects a growth in contract wins to come from the Far East in the next few years.
“Despite not securing as many contracts as the top eight contractors on the UKCS, it is worth mentioning the growing presence of South Korean contractors bidding for EPC contracts on the UKCS,” it said.
“Hyundai Heavy Industries secured three EPC contracts from January 2010 to July 2013, one of which is the estimated US$1.2 billion contract to build the FPSO for the Schiehallion expansion project.
“Daewoo Shipbuilding & Marine also entered the scene in 2012, having secured two significant EPC contracts since then.”
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The majority of work issued over the last three years has been in the Central North Sea, but the West of Shetland projects such as Laggan have seen rapid growth, with 26 contracts issued in the area during that time.
Last month’s report from industry body Oil & Gas UK predicted record investment in the UKCS of £13.5billion for 2013, but warned of a sharp decline in output over recent years, with investment not expected to improve production levels for a further two years.
However, the EIC report said it expects technology improvements to help sustain growth on the field and see new contract win rates increase.
“The advancement of breakthrough technologies, a sustained high oil price and a favourable package of tax reforms are together breathing new life into the oil and gas industry on the UKCS, spurring a new wave of project development activity,” said the council.
“These major investments are translating into abundant opportunities for the supply chain, and with investment levels expected to be maintained in the near-term, the data from EICDataStream underlines the scale of the market.”
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