Reports of the demise of North Sea oil and gas are greatly exaggerated, the boss of a global technical recruitment company insisted yesterday.
Johnathan Johnson, chief executive of Warrington-based Fircroft, said there were plenty of reasons to be optimistic about the longer term outlook despite the sector’s current woes.
He cited an increase in UK North Sea production last year and successful efforts by operators to slash their costs.
New projects coming on stream this year, including the recent start-up from Total’s Laggan-Tormore development west of Shetland, were also a sign of industry longevity exceeding the most gloomy predictions of a swift decline, he said.
Mr Johnson added: “The past few months have clearly been a difficult time for the North Sea oil and gas industry but as a company that’s been heavily involved in the sector for over 45 years, it’s our strong view that the market is cyclical and it will only be a short time before business picks up once again.
“The market has obviously struggled to react to the fact that the value of our product has essentially been cut in half but the UK government, as well as a number of major firms, have invested huge amounts into the North Sea and they’re not going to allow these assets to go to waste.
“Reports suggest that there will be an estimated 22% reduction in the cost of operating existing assets by the end of 2016 and that, supported by the first annual production increase in over a decade, will improve the outlook for the region.
“We’ve already seen the first gas being lit from the Shetland Islands in the past few weeks and these factors combined with the added investment from the likes of Royal Dutch Shell (through its £47billion takeover of BG Group), along with the anticipated increase in oil prices, are also likely to improve the outlook considerably.”
The UK Government’s recent £20million commitment to support the creation of a new oil and gas ambassador role as well as new seismic work were further grounds for optimism, Mr Johnson said.
He added; “It’s clearly been a challenging time for many in the industry and we’re doing all we can to support our colleagues who are at risk of being made redundant, but the future is looking more positive and there should be considerable opportunities around the corner.
“In the meantime we’ve seen operators look to form strategic partnerships, like that seen between Aberdeen and Pemba in Mozambique which seems to show definite signs of light at the end of the tunnel.”
Fircroft said Mr Johnson’s upbeat message was backed by as yet unpublished findings from a study it carried out, showing prospects for the North Sea oil and gas industry “still positive in the long run despite increasingly negative reports in the media.”
North-east Labour MSP Lewis Macdonald said last night it was too early to say what the impact of sustained lower oil prices may be, adding: “The challenge facing both industry and government is to ensure that vital offshore infrastructure is maintained and premature decommissioning avoided, until the upturn finally comes.”
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