The North Sea oil and gas business is not on the edge of any investment precipice due to current worldwide financial turmoil, an industry leader stressed yesterday.
Malcolm Webb, chief executive of Oil & Gas UK (OGUK), told a press conference in Aberdeen that his member companies would continue to spend billions of pounds annually, although the figure was dropping.
He was answering a question about the impact of the credit crunch on Britain’s oil and gas industry.
Mr Webb said the investment position would become clearer when OGUK publishes its annual survey into members’ spending plans in February.
The chief executive said the oil and gas industry was not immune to the effects of the credit crunch.
But he added: “We are not on the edge of any precipice or cliff.”
Mr Webb forecast delays on some projects, but he did not see the industry “turning off the tap” on North Sea investment.
“The industry is going to be spending billions. There is a lot of activity going to be going on.
“The medium to long-term future looks extremely bright,” he added.
The chief executive did not believe that the credit crunch would be around indefinitely.
Mr Webb said later that total oil and gas expenditure on the UK continental shelf last year was around £12billion-£13billion.
He expected this total to drop by about £1billion this year, and possibly slightly down on the 2008 figure next year.
Mr Webb said operational expenditure would remain the same at around £6billion annually during the three-year period, with capital and exploration spending being the areas hit by the reduction in investment.
He also said he thought the long-term trend for oil prices was upwards.
The press conference came during the PILOT Share Fair 10 at Aberdeen Exhibition and Conference Centre.
Thirteen companies presented their strategies for the North Sea over the next 18 months, which are estimated to represent potential new business in the region of £4billion.
A record-breaking 700 delegates from the UK and overseas attended the event.
Between them they listened to more than 100 presentations and attended more than 600 one-to-one sessions.
Mr Webb said: “For the first time in the event’s history, we have seen a complete sellout, which underlines the continuing importance that the industry’s supply chain places on share fair and the value businesses derive from it.”
Yesterday’s share fair also saw the unveiling of an online education pathway for those in the supply chain.
OGUK, along with OPITO – the Oil & Gas Academy – and the Chartered Institute of Purchasing and Supply, were behind the launch of the Supply Chain Gateway.
It has not only been developed to help oil and gas professionals broaden their existing skills, but also to provide a route into the profession for people wanting to pursue a career.
An oil and gas expert said yesterday he hoped the UK Government would not announce a windfall tax on the energy industry in an attempt to balance the books.
Derek Leith, Ernst & Young oil and gas tax partner, said: “This approach would represent a worrying step for anyone considering providing much-needed investment in the North Sea.”
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