Wednesday’s UK Budget should be welcome news to an industry which took a massive knock in 2011 but is starting to get back on its feet.
According to industry body Oil and Gas UK’s latest confidence survey, confidence had already been slowly coming back to the oil and gas sector.
However, the survey, carried out prior to Wednesday’s announcements, said the sector was still “fragile”.
High oil prices, at £70 a barrel, had helped encourage global investment and revenues.
But underlying confidence was still “only modestly optimistic” as firms looked to the first quarter of this year, the survey found.
Much of the concern was around the full impact of last year’s Budget, which saw the UK Government make a £10billion tax grab on the industry by raising a supplementary charge on oil and gas producers, taking the total tax take on profits for some up to 80%.
While current levels of optimism were buoyed by projects planned before the 2011 Budget, there was also uncertainty about future levels of investment, especially in marginal fields – smaller or more difficult fields which may not reap the returns needed to justify them.
The survey also revealed concerns about tightening margins – firms are not making as much profit as they were two or three years ago.
However, one area of growing optimism is overseas trade. More companies are looking at international opportunities to increase their business, according to the survey, with Aberdeen remaining their hub.
Recommended for you
