Oil and Gas Industry Key to UK Economy and Energy Security
Two areas of focus for the UK Government today are economic growth and energy security. The Oil and Gas industry is a significant contributor to both.
Oil and Gas is the largest investor among UK industrial sectors. It currently supports about 450,000 jobs across the economy and the scale of the supply chain is reflected by an estimated annual turnover of £16bn. The competence of UK skills and the quality of technology, particularly subsea, is very much in demand with the export business estimated at more than £5bn a year. This has the potential to sustain the domestic industry beyond the life of the UK Continental Shelf (UKCS).
Oil and gas production from the UKCS is currently, and has the potential to be, a significant contributor to UK energy security providing as much as 60 percent of the UK’s energy supply to 2020 while underpinning the UK’s transition to a low carbon economy. By contrast, we can only expect 15 percent of energy consumption to come from renewable resources by 2020 if current targets are met.
Recent changes to the tax regime that applies to oil and gas exploration and production in the UK have encouraged £1.4 billion investment in the Cygnus gas field. With an estimated 80 percent of the project’s expenditure destined for UK companies, Cygnus is expected to create around 4,000 jobs across the UK and deliver about 5 percent of its energy consumption.
As a result of this success the UK Government is keen to maximize recovery from the North Sea and promote investment in marginal fields. This includes a contractual approach to oil and gas decommissioning that will strengthen the market in North Sea assets and release billions of pounds of capital for further investment.
These measures have created demand in the UK for new subsea engineering solutions to help address the challenges of safe and reliable performance in deep-water production projects. The experience gained from these projects in the UK will enable the industry to support a vital export market by meeting similar demand from provinces around the world.