Surging oil prices will encourage more investment in UK North Sea oil and gas production, the boss of global energy service firm Petrofac said yesterday.
Chief executive Ayman Asfari said the high cost of projects in the UK continental shelf compared with other oil and gas regions meant low commodity prices were a disincentive to operators.
The recent jump in the price of oil – to more than $115 a barrel for Brent crude – makes many more projects possible, according to Mr Asfari.
He said marginal new fields and mature assets deemed unviable previously were now more likely to be exploited as higher oil prices outweighed operators’ cost considerations, adding that, as a result, the North Sea market for Petrofac was looking good.
Petrofac’s CEO said the North Sea offshore industry was also helped by a UK Government much in tune with its needs.
The Press and Journal reported last month that a resurgent UK oil and gas industry was expected to deliver thousands of supply-chain jobs for the north-east this year.
Increased capital investment amid buoyancy in the market just now could lead to up to 15,000 people being taken on nationwide this year.
According to industry organisation Oil and Gas UK, spending on exploration and production in the UK continental shelf will soar to about £8billion this year, up from less than £5billion in 2009.
Petrofac is developing a gas-processing plant for Total Exploration and Production UK at Sullom Voe, in Shetland, after winning a £500million-plus contract for the work.
Mr Asfari said the seas west of Shetland were likely to yield other opportunities.
Globally, the group’s prospects are bolstered by a backlog of orders worth £7.2billion at the end of 2010: up by 45% from a year earlier. Petrofac’s boss said he was relaxed about the international oil and gas facility service provider facing formidable competition from an enlarged player in the sector in the wake of Wood Group’s £600million-plus acquisition of smaller rival and fellow Aberdeen company PSN late last year.
He added: “There is room in the market for all of us.”
He was speaking after Petrofac posted a 52.5% year-on-year jump in pre-tax profits to £412.12million for 2010. Revenue was up by 19% at £2.67billion on the back of strong growth at the group’s engineering/construction and offshore-engineering/operations units. Mr Asfari said: “2010 has been an exceptional year for us.”
The company’s results included a gain of £76.8million from the demerger of North Sea oil and gas assets to a new company, EnQuest, which joined the Stock Exchange last April.
Petrofac, which employs about 14,000 people out of key operating centres in Aberdeen, Woking, Sharjah, Mumbai, Chennai and Abu Dhabi and a further 20 offices worldwide, said it expected net profits to grow by about 15% during 2011. The company’s shares closed last night up 9p at £14.75.
Recommended for you
