FUNDAMENTAL issues must be addressed in the next two years if the North Sea oil industry is to avoid a rapid and premature decline, according to a new report.
The study, which questioned 30 senior industry executives in the UK, Norway and the Netherlands, warned that action over the next two years is needed to avoid “rapid and premature decline”.
The PricewaterhouseCoopers (PwC) research comes as the crisis-hit sector’s industry body Oil and Gas UK warned of up to 120,000 job losses by 2018 following the plunge in the price of Brent Crude.
Read more: North Sea hammer blow as one in three oil and gas firms plan to cut more jobs this year
A fifth of respondents told the survey that they believed the North Sea was in terminal decline.
The report found that the North Sea remained an “exciting prospect” with up to 30 billion barrels of oil equivalent undiscovered, but the window of opportunity to effect change was getting smaller.
The study, entitled A Sea Change, also claims that the industry is lacking leadership and new ideas are urgently required to ensure cost efficiency is embedded irrespective of the vagaries of the oil price. A “super joint venture vehicle” will be key to consolidating smaller and fragmented assets under one operator, the report found, adding a robust roadmap is needed to transform the basin, meet short- term energy needs and bridge the gap to a lower carbon future.
PwC’s Alison Baker, said: “We picked up a real sense of urgency to create one last cycle of success that will retain and generate jobs, stimulate growth and ensure security of energy supply. But this was matched by a level of frustration at the fundamental issues that need tackling to avert the risk of rapid and premature decline.
Read more: Oil price slump could see '120,000' jobs lost by end of 2016
The report also said the government should consider setting up a decommissioning fund or a guarantee scheme to help smaller companies. WWF Scotland director Lang Banks said: “Our economy will continue to rely on oil and gas for some time to come, but PwC are absolutely right to highlight the need to prepare for the inevitable transition to a zero carbon future.
Read more: Herald View - Action needed to avoid a deeper crisis in oil and gas
“We need ministers to support a just transition that enables us to harness the engineering skills currently deployed in the oil and gas industry and apply them to supporting a range of cleaner forms of energy production.”
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