Oil and gas operators are “much more likely” to break contracts, change suppliers or alter prices than service firms in response to the downturn, according to a new study.
The Oil and Gas Authority (OGA) has slammed “poor behaviour” in the North Sea supply chain, with firms facing demands to cut rates as much as 40% “overnight”.
The North Sea oil industry has been in transition for some years following the collapse of oil prices in late 2014. Large cost reductions have been painfully achieved. Production has increased due to a combination of new fields coming on stream plus a substantial increase in production efficiency to around 75%. But new field investment expenditure has fallen dramatically since 2015 and exploration remains at a relatively low level reflecting principally the maturity of the province as well as oil and gas prices far below their pre-2015 levels.
Lower crude prices continue to bite into North Sea oil and gas company profits and spending plans, with another two firms revealing impacts in their third quarter results yesterday. Apache and Canadian Natural Resources (CNR) reported losses totalling billions of pounds and also highlighted cost-cutting on a scale being seen right across the industry.
UK oil and gas companies are gearing up for a new era of transparency which will shed light on links between operators and governments around the world, law firm Pinsent Masons says. An overhaul of financial reporting driven by a new European Union directive is due to come into force on New Year’s Day, months ahead of other EU member states. Directors face criminal convictions and unlimited fines if details of any payments made to governments are not disclosed to Companies House. An overhaul of financial reporting driven by a new European Union directive is due to come into force on New Year’s Day, months ahead of other EU member states. Directors face criminal convictions and unlimited fines if details of any payments made to governments are not disclosed to Companies House.