The UK’s oil industry is “close to collapse” but the falling oil price could have a net benefit to the UK economy, according to experts.
Robin Allan, chairman of the independent explorers’ association Brindex, said it is “almost impossible to make money” with the oil price below 60 US dollars (£38) a barrel and there will be no new investments.
But accountants PricewaterhouseCoopers (PwC) said the falling oil price “should be a net benefit to our economy as a whole, even if there is some losers in the UK oil and gas sector and in particular places like Aberdeen”.
Subsea 7 will be making changes to its organisational structure by switching to two global units.
The company said the move will be made to strengthen its capabilities and competiveness.
A Northern Hemisphere and Life of Field Business unit will comprise the UK and Canada region, Norway and the Gulf of Mexico.
The life of field and I-Tech division will be managed globally.
A pledge by US policymakers that they will be patient in their approach to raising interest rates helped ease global market jitters today.
The latest meeting of the US Federal Reserve highlighted optimism over the country’s economic performance but appeared to rule out a rates rise in the first quarter of the year.
The message lifted the Dow Jones Industrial Average on Wall Street by more than 1.5% and helped the FTSE 100 Index improve 35.3 points to 6371.9 after a strong session for Asian markets overnight.
Crude oil production from US wells is poised to approach a 42-year record next year as drillers ignore the recent decline in price pointing them in the opposite direction.
US energy producers plan to pump more crude in 2015 as declining equipment costs and enhanced drilling techniques more than offset the collapse in oil markets, said Troy Eckard, whose Eckard Global LLC owns stakes in more than 260 North Dakota shale wells.
Oil companies, while trimming 2015 budgets to cope with the lowest crude prices in five years, are also shifting their focus to their most-prolific, lowest-cost fields, which means extracting more oil with fewer drilling rigs, said Goldman Sachs Group Inc.
The former head of US security company Blackwater USA, Erik Prince, was hired by South Sudan to help repair damaged oil facilities and boost output cut by a year of civil war.
Prince’s Frontier Services Group Ltd. (500), a Hong Kong-listed logistics and transportation company, is being paid 18.7 million euros ($23.3 million) by South Sudan’s Ministry of Petroleum to transport supplies to and perform maintenance on the production facilities at the oil fields, Chief Executive Officer Gregg Smith said.
About 30 employees including pilots, engineers and logistics technicians have been using helicopters and airplanes to reach South Sudan’s oil fields since September, Smith said.
International Tubular Services (ITS) has become the second Scottish business to self-report having benefited from a potentially corrupt payment, and reach a civil settlement which sees them paying over a substantial sum to the Civil Recovery Unit.
My advice to other Scottish firms with bribery and corruption “skeletons” would be to come clean now to reduce the risk of being subject to a criminal investigation and more significant penalties after a self-reporting deadline expires next June.
Aberdeen-based ITS admitted it had benefitted from a profit of £172,200 as a result of a corrupt payment made by a former Kazakhstan-based employee to secure additional contractual work in the former Soviet republic.
The decision by Wood Group PSN to chop the rates paid to its limited company offshore and onshore contract workers and freeze the pay of most onshore employees here in the UK comes as no surprise.
Wood Group PSN is right to take a stand, especially on the issue of independent contractors, given the rates that they have been able to command over the past decade or so.
OK, this is the second reduction that the group has sought to impose on the so-called IR35 brigade, bringing the total cut announced this year to approaching 20% for some.
By Professor Alex Russell and Professor Peter Strachan
Over the past 3 months the share price of the Wood Group has fallen by 21.5%.
The recent announcement of the creation of a possible 150 new jobs on the back of winning a £500 million contract for BP may help stabilise this price slide.
But like all oil service companies their share price fate is dependent on the price of a barrel of oil. And the once powerful international oil industry appears to be impotent to influence prices one iota at present.
The UK Government must bring forward changes to the way the oil and gas industry is taxed by March or there will be “extremely serious repercussions“ for the sector, Energy Minister Fergus Ewing has warned.
Danny Alexander, the Chief Secretary to the Treasury, said earlier this month that UK ministers would consult on several new approaches to taxation.
The reforms would lower the tax burden on the industry, which has been hit by recent falls in crude oil prices.
An advisory group has been established to help the Government address Scotland’s failure to equip young people for work.
Sir Ian Wood will be a founding member of the Scottish Government’s Developing the Young Workforce National Advisory Group.
The oil magnate chaired the Commission for Developing Scotland’s Young Workforce, which found Scotland is “simply not preparing or equipping young people for the world of work”.
Egypt has signed its first contract to extract gas by fracking in a deal with Shell and Apache which includes investments of up to $40million.
The oil ministry said it was part of efforts to boost output amid tumbling oil prices.
FMC Technologies has received an order from Star Deep Water Petroleum Limited to provide subsea equipment for operations in Nigerian waters.
The Agbami field is located 70 miles off the coast of the central Niger Delta region, at a water depth of approximately 4,800 feet.
An estimated 15,000 oil and gas workers in Iraq will be trained in how to deal with the potential hazards of hydrogen sulphide.
Oil giant Shell and Industry training standards body Opito have joined forced to ensure workers are protected.
The corrosive and hazardous gas, also known as 'sour gas', H2S occurs in the production of oil and gas fields which have a high content of it in their reservoirs.
Iraq said a collapse in oil prices and the cost of fighting Islamic State militants may force the country to review its plans to boost crude production this decade.
“It may be necessary to revisit our ambitious plans for the next five years,” Iraq’s Deputy Prime Minister Rowsch Shaways said at a conference in London, without specifying what measures the country might take.
“But we are committed to progress in this vital economic field with regard to production and export capacities.”
The DECC (Department for Energy and Climate Change) has made £2.5million cash pot available to encourage the development of CO2 storage in the North Sea.
The money will help companies to identify the next phase of sites under the sea to store C02 emissions from coal and gas power stations as well as heavy industry such as steel and cement factories.
The DECC will provide the cash from its Innovation Fund, and it will be delivered by the ETI (Energy Technologies Institute).
Offshore and onshore contract workers employed by Wood Group will have their rates cut by 10% on the back of lower oil prices.
The company said the move will be effective from January 2015.
Salaries will also be frozen for the majority of UK-based Wood Group onshore employees.
Subsea 7 has been awarded a contract by the Hess Corporation for installation work on the Stampede Project in the Gulf Of Mexico.
The deal includes work on flowlines, steel catenary risers, umbilicals, jumpers and associated subsea architecture which will tie-back two drill centres to a tension leg platform.
The company said production would be via two 10-inch flowlines from each drill centre.
An oil services firm has admitted making corrupt payments to secure contracts in Kazakhstan.
Aberdeen-based International Tubular Services (ITS) benefited from bribes made by a former employee to procure work from a customer in the oil-rich central Asian country, prosecutors said.
The corruption was uncovered when the engineering company was being sold last year and the Crown Office said today its civil recovery unit had seized £172,000 under proceeds of crime laws.
SeaBird Exploration has received an LOA (Letter of Agreement) for one of its vessels in the South East Asia region worth up to $4million.
The deal will see the vessel chartered for around 35 days starting in early April next year.
Bank of England governor Mark Carney said the fall in the oil price was a “net positive development” for the UK.
Presenting the Bank’s financial stability report in London, he said: “We should be clear that the 40%-plus drop will flow quickly through to consumers and increase real disposable income and is a net positive for the UK economy.”
But Mr Carney warned that the fall in the oil price also presented some risks to financial stability.
Atlantic Petroleum said it has reduced its capital expenditure for exploration next year by 75% on the back of lower oil prices.
The company has budgeted up to DKK 30million for its near-term exploration activities.
It expects operating expenditures of around DKK 175million for the full year 2015.
Chief executive, Ben Arabo, said: “We are adapting to the market situation and are cutting costs in 2015 where we can.
Technip has won a €100million contract to build an onshore terminal in India as part of the intergrated development of the Vashishta and S1 fields.
The award, from the ONGC (Oil and Natural Gas Corporation Limited), is one of the critical componenets in the development of the fields.
The contract will include basic design, detailed engineering, procurement and fabrication of the new onshore terminal facilities which will be integrated into the existing terminal.
The “big four” supermarkets are all cutting their fuel prices.
With world oil prices plunging, Asda, Sainsbury’s, Morrisons and Tesco are all reducing their petrol by 2p a litre and their diesel by 1p a litre from tomorrow.
The Asda cut means its customers will pay no more than 110.7p a litre for petrol, with the company’s diesel costing 117.7p a litre.
Nigeria’s two oil unions are set to meet with government officials for talks today as an indefinite strike aimed at curbing local fuel supply and exports entered a third day in Africa’s biggest crude producer.
The impact of the strike has been restricted to domestic fuel supply with oil lifting and export terminal operations unaffected at the moment, Francis Johnson, president of the Petroleum and Natural Gas Senior Staff Association of Nigeria, or Pengassan, said from Lagos, the commercial capital.
Union leaders will hold talks with the authorities today in Abuja, the capital, he said.
