Crystal ball gazing is an entertaining but hazardous occupation and let’s be honest, who accurately predicted that a 40% drop in the price of crude oil lay ahead? That said, heading in to 2015 there are certain steps which can be taken to ensure the UKCS is sustainable and competitive on the assumption of a low oil price in the mid-term.
There has been an increased focus on the energy industry in recent weeks and months as a result of quickly decreasing oil prices. A key objective for the industry in 2015 will be to identify where savings can be made whilst maintaining optimum exploration and production activity. As a result, government support is required to ensure the industry is sustained. Some positive changes were announced in the Autumn Statement, including a small reduction in the rate of the supplementary charge and the extension of the ring fence expenditure supplement. However, those in the industry will be lobbying hard for further reforms to the oil and gas fiscal regime. We already know of several areas that the government, together with the Oil and Gas Authority (OGA), will be focusing on in the New Year.
Happy new year. As the dust settles on a momentous year in Scotland's history, thoughts turn to 2015, a year likely to be highly significant in the future of the North Sea. Returning to work in January, we contemplate life under a new regulator, changes in taxation and further mature sector challenges. All of this is, of course, underpinned by plummeting global oil prices which have paralysed new investment, leading to painful cutbacks across Aberdeen. The International Energy Agency (IEA) sees oversupply continuing in to 2015 although price predictions invariably confound analysts; how to forecast the relative impact of American shale, Saudi market-share strategy and post-Ukraine sanctions on Russia? High prices may be some way off, however, as cheap oil is seen by many importing nations as the biggest and easiest GDP-booster out there. Low prices may well lift the global economy in 2015 (and perhaps have political consequences amongst beleaguered exporters).
Robin Watson’s career boils down to two things - adventure and family. Growing up on the west coast of Scotland, his appetite for adventure was shaped by the wide expanse of the neighbouring sea. He quickly joined the merchant navy before later transiting into the oil and gas sector. In the midst of his career climb he met and married his wife. And according to Wood Group’s new chief operating officer, his business success is a credit to his firm family foundation. For him, one could not exist without the other. Energy Voice sat down with the newly promoted executive for its latest instalment of The Journey. He discusses how he manages risk, making tough industry firsts, the challenges the service sector currently faces and what it was like to take up the reins at one of the biggest service companies in the global sector. Watch the full interview below or browse our highlight clips based on topic.
Tightly wrapped under our Christmas tree is my son's first rugby ball. As his appetite for the sport grows he'll soon learn the rules and watch highlights of some of the most historic games. And then maybe somewhere down the line, a coach, a teammate or a fellow fan will teach him about the very important 'game of inches'. I can't help but think the industry, now more than ever, could take a cue from this sport's playbook. Humphrey Walters, who is known in both sport and business arenas, coined the phrase.
This week we ran a video of a rare Porbeagle shark caught on a ROV pilot’s camera in the North Sea and it went viral. The social share and reach of the story was fantastic but ultimately short lived. Energy Voice was soon asked to take the film, which was uploaded by its creator to the public domain, down because it was “commercially sensitive”. What’s so sensitive about a shark you might ask?
Energy firms and airlines were big movers today after the decision by Opec ministers not to cut output triggered a further fall in oil prices. With Brent crude at a fresh four-year low of 72 US dollars a barrel overnight, the FTSE 100 Index tumbled 40.1 points to 6683.3 on the back of sizeable declines for some of the City’s biggest stocks. BP was down 3%, or 14.15p to 412.25p, and rival Royal Dutch Shell slid by 65p to 2200.5p. Oil and gas exploration firm BG was the biggest faller in the top flight with a decline of more than 7% or 73.8p to 912.9p, while energy services firm Weir declined 152p to 1808p.
Declining oil and gas production saw UK stocks fall for the third straight day.
Nigeria, Africa’s biggest oil producer, is now using a satellite tracking system in a bid to raise more than $1billion in fines annually for illegal gas flaring. The major oil producer struggles to support the country’s energy needs and fails to even keep the lights on for more than three hours a day in some parts of the country. However, it’s hoped by tracking illegal flaring the country has a better chance of harnessing its gas potential which can eventually feed into supporting Nigeria’s flagging energy security.
Weaker oil stocks hit the FTSE 100 Index today as prices tumbled to a four-year low on expectations that Opec will not take action to cut production. BP, Royal Dutch Shell and Petrofac were among the fallers as the FTSE 100 remained close to its opening mark at just 5.2 points higher at 6734.4. The cost of Brent crude dipped to around 76 US dollars a barrel, a third below its level in June, as members of the Opec oil cartel gathered in Vienna. Saudi Arabia, which dominates the 12-member organisation, has downplayed the likelihood of a cut in production, with oil minister Ali Naimi arguing that the market would eventually “stabilise itself”.
Moves to make it a crime in the UK to breach international sanctions against Russia from this weekend have been given the go-ahead by the High Court.
The US stock market eked out another record close ahead of the Thanksgiving holiday as investors assessed the latest reports on the economy and some corporate earnings. However, energy stocks were once again the biggest loser of the 10 industry groups represented in the S&P 500 index as the price of oil dipped again.
Business secretary calls on shareholder to vote against BG pay packet Business secretary Vince Cable has urged BG shareholders to vote against a ‘golden hello’ pay packet for the company’s new chief executive, Helge Lund. Earlier this week, the Investment Management Association (IMA), whose members manage more than £5trillion of assets on behalf of UK and overseas clients, issued a “red top” warning. Business secretary Vince Cable has urged BG shareholders to vote against a ‘golden hello’ pay packet for the company’s new chief executive, Helge Lund. Earlier this week, the Investment Management Association (IMA), whose members manage more than £5trillion of assets on behalf of UK and overseas clients, issued a “red top” warning.
One of Russia’s leading oil companies is asking the High Court in London for an urgent order to stop the Government introducing in the UK this weekend sweeping new economic sanctions announced by the US and Europe. Lawyers for OJSC Rosneft Oil Company are seeking a “stay” on the sanctions, which are due to take effect in Britain on Saturday (November 29), until their legality can be challenged in an application for judicial review.
No one should cut oil production amid faltering prices, Saudi Arabia’ oil minister today said. Ali Al-Nami was speaking ahead of OPEC’s highly anticipated meeting tomorrow in Vienna, when he insisted crude prices would once again right themselves.
A stunted demand market saw Seadrill fall to a record low for the past six years. A "difficult" move to suspended the offshore driller’s dividends spurred the slide. The firm fell 16% to NOK118.8. The offshore driller, which is controlled by billionaire John Fredriksen, was hit by a weakened demand for rigs and faltering oil prices. Seadrill is currently sitting at its lowest valuation level since July 2010. Speaking about the suspension, Fredriksen insisted it was a “difficult” decision but equally necessary to weather the current market climate.
A technology development body set up to encourage innovation in the wave energy industry will not provide jobs on the same scale as a wave power company which has gone into administration, MSPs have been told. Wave Energy Scotland will bring the best engineering and academic minds together to work on furthering wave technology, energy minister Fergus Ewing said.
The OECD has cut its forecast for UK growth as it sounded a warning about the dangers facing the world economy. Gross domestic product (GDP) is now expected to increase by 3% this year, down from 3.1%, according to the international think-tank. It still leaves the UK growing faster than any other major advanced economy. But the growth forecast for next year was also scaled back by 0.1%, to 2.7%, as the US remains on course to lead the recovery race in 2015.
A judge sent former Portuguese prime minister Jose Socrates, at the forefront of Europe’s drive to adopt renewable energy, to prison while the ex-leader fights accusations of corruption, money-laundering and tax fraud. The judge decided after an initial hearing there was sufficient police evidence to keep Socrates in custody on preliminary charges of wrongdoing, a court statement said.
The Government is “backing the wrong horse” in its policy on fracking and needs to invest further in renewables, a Lib Dem MP has warned. Former home office minister Norman Baker argued shale gas extraction had been “over hyped” and could be “damaging rather than helpful” to the country. The MP for Lewes said there was “significant doubt” as to whether or not the reserves of potentially usable shale gas and shale oil were going to be as “exhaustive and extensive as the Government has maintained”. Energy policy aims, he said, were to secure security of supply, help meet climate change targets and use the energy supply to create jobs, help the economy and keep prices down. Speaking at the start of his Westminster Hall debate on fracking, the extraction of shale gas through controversial hydraulic fracturing, he said: “The issue is whether or not the Government’s policy in terms of fracking achieves those objectives and I’m not sure it does and therefore I would suggest to the minister we may be backing the wrong horse or at least putting too much money on the wrong horse.”
China has taken the first step in its pledge to cap carbon emissions by 2030 after confirming plans to launch a nationwide carbon market. Su Wei, an official at the climate change department under the National Development and Reform Commission, confirmed in Beijing plans to craft an emissions control plan and rules for carbon-permit trading.
Oil fell ahead of a crucial meeting in Vienna on Thursday of the Organisation of Petroleum Exporting Countries. Traders will be looking for a possible agreement to cut production to shore up prices. The price of crude has tumbled 26% since June as producers kept output stable while demand in Europe and other markets weakened. Benchmark US crude fell 73 cents, or 1%, to $75.78 per barrel on the New York Mercantile Exchange. Brent crude, a benchmark for international oils used by many US refineries, fell 68 cents to close at $79.68 a barrel on the ICE Futures exchange in London.
The oil and gas industry has called for tax cuts to ensure further exploration and extraction of the North Sea is encouraged, following reports of a drop in confidence within the sector. Firms have called for changes to the fiscal regime ahead of the Chancellor’s Autumn Statement next week. The call comes after the 21st Oil and Gas Survey found that, for the first time since 2008, more operators and contractors are pessimistic about their UK Continental Shelf (UKCS) activity than are optimistic.
Elements are falling into place for an agreement to allow talks on Iran’s nuclear programme to continue another seven months, a well-placed western diplomat has said. The diplomat said that according to the deal, a broad agreement should be completed by March 1 2015, with the final details worked out by July 1. The diplomat is familiar with the discussions now taking place in Vienna, Austria, on how to continue the negotiations past the original deal deadline of midnight tonight.
US shale production is largely shielded from dipped oil prices, the chief executive of Dow Chemical said. Andrew Liveris, was speaking at a conference in Dubai, when he explained the majority of well and production investments in the US shale market had already been made, allowing the sector to withstand the falling crude prices.
