Two leading lights in North Sea oil and gas delivered upbeat prospects for the sector yesterday, saying global demand for traditional fuels was unlikely to evaporate anytime soon.
The positive messages came from Bernard Looney, the managing director of BP’s North sea business, and Scottish Enterprise energy team director Brian Nixon.
They were speaking to nearly 400 delegates at an Oil and Gas UK (OGUK) industry gathering in the Beach Ballroom, in Aberdeen.
Mr Looney and Mr Nixon used a raft of previously published figures and graphs to back up their belief there was plenty to be optimistic about in the UK North Sea despite recent global economic woes.
Mr Looney also repeated previous warnings that fiscal and regulatory arrangements needed to be less complicated and “fit for purpose”. He added: “This means reducing complexity, creating stability and ultimately reducing the North Sea tax burden.”
He said BP’s preference was for a simple across-the-board cut in supplemental corporation tax to improve the profitability of ongoing operations. Measures in the April Budget aimed at stimulating investment in small and challenging projects on the UK continental shelf needed to be widened to capture more potential developments, he added.
Mr Looney also called for more effective co-operation between operators, contractors and suppliers.
The challenge of climate change was driving investment in alternatives but fossil fuels would remain the dominant source of energy well into the future, he said, adding: “The world is not about to run out of oil.
“Proved oil reserves are sufficient to meet current production for 42 years; for natural gas the figure is 60 years and for coal it’s 122 years.”
The BP boss said population growth and energy-hungry developing economies meant that the world would need more oil and gas.
He added that the estimated 25billion barrels of oil left in the North Sea were, therefore, still significant despite declining investment levels, global competition, decreasing field size, increasing costs, fiscal uncertainty and volatile oil and gas prices.
Mr Nixon said there were considerable challenges facing the Scottish oil and gas industry but it had shown resilience in the past and could do so again. He added: “It’s possible we could be seeing some improvement in trading conditions, with the oil price climbing slowly but steadily over recent weeks.
“Despite significant growth in renewable and alternative forms of energy production, it remains clear that demand for oil and gas will continue long term.”
Highlighting a claim made by BP in its latest statistical review that the world had enough proven resources of oil, natural gas and coal to meet energy needs for decades, Mr Nixon said: “This should provide encouragement about the future opportunities for our industry and our supply chain in particular.”
The event concluded with a panel discussion, involving Mr Looney, Mr Nixon and Paul Dymond, the operations and supply-chain director at OGUK.
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