Job Losses Cut Costs, But Investment Still Needed to Stop Production Decline

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According to the the Oil and Gas UK Business Outlook production could fall from 2020 if fresh capital is not secured.

Worryingly the report also predicts a fall in capital investment over the next two years adding to the concerns.

Chief executive Deirdre Michie said that although exploration and production companies “may collectively see a return to positive cash-flow for the first time since 2013” that would be dependant on┬ácosts being kept under control and commodity prices holding steady.

However she went on to say that “this is unlikely to translate immediately into reinvestment or increased activity.”

The report also reveals that the average cost of producing a barrel of oil has halved from its highest level in 2014 to $15.30. Much of that cost reduction has come through job losses.

The report said the oil and gas industry still supports 330,000 job across the UK but that number has not been revised as part of the business outlook.