Action required for UK oil and gas

The

(UKOOA) has called for government and industry action to address signs suggesting that the

offshore oil and gas province is becoming less competitive and less able to attract the investment.

UKOOA published its 2006 Activity Survey Report yesterday, which summarises the exploration, investment and production plans of North Sea oil and gas operating companies over the next three years.

While exploration and appraisal activity remains encouragingly strong, the report also disclosed high cost inflation, a 250,000 barrel per day fall in expected production and signs of a drop in capital investment in 2007 after three years of growth, by £1-1.5bn to around £4-4.5bn. This raises concerns that the UK oil and gas basin could be finding it more difficult to compete for global investment, said UKOOA.

Malcolm Webb, UKOOA’s chief executive, said: ‘The survey provides a more challenging perspective on the future of the UK continental shelf than we have seen for some years. Whilst the strong level of exploration activity is welcome, the more rapid than expected decline in production; the significant cost inflation in 2006 and the forecast of a reduction in investment in 2007 are worrying.