UPDATED FRIDAY MORNING DEC 19
North Sea “close to collapse” says the man from Brindex. I am of course referring to remarks made to the BBC by its chairman Robin Allan, who then goes on to say that the UK’s offshore industry has been in such territory before.
The 1986 oil price crash was a shocking event and did terrible damage at the time. However, it also marked the start of a turning point as the North Sea gradually began to mature. Various initiatives in the 1990s designed to tackle key issues like rocketing costs helped and they were timely given the next slump that started with a gradual oil price slide in 1997, bottoming out in late 1998 at less than $10 a barrel for a few days.
The damage inflicted to the industry’s confidence was considerable, though things were helped by the fact that production was far higher than now, indeed just coming off peak.
The post 2008 banking crash mini-slide in 2009 was shrugged off with ease, helped along by a return to $100-plus oil prices.
Today is very different. This is a slump; it will last for at least a year; production is well down; Government MUST get its finger out PDQ by slashing taxes … don’t wait for the Spring Budget; and operators and their supply chain must get their house in order as sloppy management and practices have much to do with the current mess.
But the North Sea is far from “close to collapse”, not with up to 24billion barrels oil equivalent of resources potentially still out there to pursue, not counting possible basement resources, and not counting shales.
In short, Allan is being irresponsible by talking his own industry down in such a manner.
You just don’t do that, it’s unprofessional.
That said, he sure as hell has got the attention of the mainstream media; presumably therefore the attention of the Treasury wallahs
If Danny Alexander and Priti Patel … both of whom came to Aberdeen early December to trumpet proposed fiscal review changes … haven’t got the message by now that government is itself partially responsible for the current crisis then what will?
As I stated above, the start point is slashing taxes … NOW … not in several months.
And let’ begin with the fancy footwork over Selective Corporation Tax, including recent sleight of hand changing of rules leading to the measly 2% reduction just implemented.
Abolish SCT forthwith.
So what if it costs Treasury £500million-plus in tax receipts. The consequences for the UK economy will be much worse if they don’t get rid of this iniquitous tax burden forthwith.
And for heaven’s sake, get on with scrapping that archaic PRT (Petroleum Revenue Tax) too, bearing in mind that the 100 or so fields affected by it are also critical in infrastructure terms.
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