A generous spirit and calm disposition are desirable qualities at this time of year. From giving and receiving gifts, making long drives for annual visits or even putting up with certain relatives, commitment and patience are needed.
The North Sea oil and gas industry needs a similar outlook in 2015. There are going to be challenging times, but with less self-interest and more collaboration there are certain to be good times too.
The drop in the price of a barrel of Brent Crude to below $60 has shocked the world. However, it is also a call to action. Think differently from before and differently from competitors and you will make it. Hold fast and ride out the storm with your core business beliefs intact and there will be rewards.
After the industry was struck by so called collapse in the mid-1980s and late 1990s, it emerged stronger on both occasions. Greater safety measures, better skills, efficiencies in the supply chain, plus innovation in technologies ensured production could continue at pace and have all been evident in recent years.
Predictions from the UK Government’s Office of Budget Responsibility (OBR) suggest tax receipts from North Sea oil and gas could be as low as £2.8 billion by the end of the 2014/15 fiscal year. This is down from £6 billion two years ago. This is clearly a concern, but like the challenging times faced in the past, it will be a chapter in the middle of the UK’s energy production story and not the epilogue.
There are many growth companies based in the Aberdeen region which stretch around the world.
Losses at home can often be offset by gains abroad. Encouraging investments have been made in 2014 and the next financial year could very well beat it for deals. The UK Continental Shelf remains an ideal testing ground for young companies with breakthrough technologies. It has the sea swells and the harsh weather, but it also has thousands of companies calling the region home and a relatively settled, sympathetic political backdrop.
The UK Government has hit the industry with high supplementary taxes in the past, but it has also recently recognised the need for a decrease to boost business. It gives the inventors and the engineers the opportunity to work together and find the solutions to reach better days ahead.
Ian is chairman of Campbell Dallas LLP, head of renewables and a member of the firm’s tax consultancy group and corporate finance group. He has more than 25 years’ experience in the energy sector.
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