PREMIER Oil has unveiled the latest in a stream of big writedowns by a raft of companies in the value of assets on the UK Continental Shelf.

The $385 million (£250m) writedown in the value of Premier’s Solan development West of Shetland is not something to be sneezed at.

This exceptional charge, which pushed Premier into the red, and steep writedowns by other big UK oil and gas sector players underline the pressures on the industry in an environment of much-reduced crude prices.

Aberdeen oil services company Wood Group this week confirmed it had cut around 5,000 jobs, some 1,000 of them in the UK, so far this year. And chief executive Bob Keiller highlighted potential for further cuts in the headcount.

The stream of writedowns and job losses has been accompanied by a steady flow of fairly gloomy comments from oil company bosses about the possibility of crude prices remaining low for a long time.

It is always easy, at low points in a cycle, to think things will never get better again. Or at higher points, as in the case of exuberant housing markets in some parts of the UK right now, to think the money-go-round will continue forever, with people having failed to learn the lessons of what happened last time the music stopped.

So the oil industry, while understandably gloomy, should be careful not to overdo the pessimism. Remember the tail-end of the last millennium, when oil prices dropped to about $10-a-barrel?

That is not to say it was good news to see benchmark US crude dropping towards $40-a-barrel during trading yesterday on worries over a global glut. North Sea Brent crude futures held above $46-a-barrel.

There are undoubtedly some large and dark clouds on the horizon that suggest it will be some time before oil and gas companies return to calmer waters.

Worries over the momentum of the Chinese economy have been weighing heavily on the prices of oil and other commodities as markets reassess the likely levels of future demand from the resource-hungry Communist nation as its growth slows. These worries over China have also hit global equity markets hard.

Meanwhile, the fracking boom in North America has had a major impact on global energy markets.

Then there is the prospect of much more Iranian oil coming on to the world market as relations between the Gulf nation and the West continue to show signs of becoming less strained.

So there are good reasons for oil companies to be cautious.

And they have certainly taken swift action to slash their costs, cutting pay rates as well as jobs. Tough times in the oil and gas sector have depressed Aberdeen International Airport’s passenger numbers, and Granite City hotels have suffered sharp falls in occupancy and room rates.

It is worth noting that North Sea players may have been very keen, even before the tumble in crude prices in the second half of last year, to cut pay rates. There were plenty of signs that the labour market in the offshore sector, and in Aberdeen itself, was very hot. That said, we should not forget the skilled, unsociable, and often onerous nature of offshore work, and remember that people deserve to be rewarded accordingly.

The tumble in the oil price has undoubtedly presented North Sea players with an opportunity to cut labour costs. However, they would almost certainly not have wanted this kind of opportunity and are clearly having to reduce the per-barrel cost of production significantly.

The long-term viability of the North Sea depends on companies being able to make a decent return, especially given the continuing rise of other exciting oil and gas territories around the globe. And, in this regard, we should take some comfort from the number of Scottish oil and gas services companies developing world-leading technology that enables production costs to be cut.

What is important, especially in light of billions of pounds worth of developments occurring West of Shetland, is that the industry does not find itself short of the necessary skills when the environment eases or when the big new projects come to fruition.

And, even against the current gloomy backdrop of heavy asset writedowns, pay cuts, and job losses in the UK oil and gas sector, as well as tougher times for an Aberdeen economy that had for so long defied the broader economic troubles, there are bright spots.

The commitment of big oil companies to the huge West of Shetland developments appears to be undiminished by warnings that crude prices could remain low for a long time. This is surely good news in the context of the long-term outlook for the UK oil and gas sector.

And several oil company bosses have in recent days provided some other reasons to be cheerful.

The head of EnQuest’s operations in the North Sea, Neil McCulloch, this week underlined the company’s desire to expand in the area through acquisitions. He believes there is plenty of money to be made even with the crude price in the doldrums.

Oil industry veteran Tom Cross said recently that his Parkmead Group is braced for the crude price to stay low but can still make plenty of money from North Sea acquisitions.

He said Aberdeen-based Parkmead is eyeing 10 deals, which could involve it paying out up to $100 million (£65m) for the right asset. Mr Cross is a seasoned North Sea player, having built up Dana Petroleum before overseeing its sale to the Korea National Oil Corporation.

And Cairn Energy chief executive Simon Thomson revealed this week that the Edinburgh-based company was running the rule over possible acquisition targets in the North Sea. He cited potential opportunities created by the drop in the oil price for companies with cash in the bank, in terms of buying good assets at attractive prices.

Opportunities for acquisitions might be created by pressure on other players, or wishes by the majors to rationalise North Sea portfolios.

Nevertheless, it is crucial to remember, as headlines of North Sea gloom continue, that astute industry veterans are still very keen to buy assets.

This show of faith in the UK oil and gas sector is certainly not something to be sneezed at, and we should take heart from it.