Gloomy outlook dominates UK’s oil and gas sector

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LONDON — Companies in the UK oil and gas industry are increasingly pessimistic about their business prospects, according to Oil & Gas UK’s Q4 2015 Business Sentiment Index.
The report, which was published on Tuesday, reveals that optimism in the sector is at its lowest since the index began in 2009. With a score of -32 on a -50/+50 scale, the index has remained in negative territory for the sixth quarter in a row.
The index surveys representatives from both operator and contractor companies, including small to medium enterprises, on a quarterly basis.
“The deteriorating market conditions and the scarcity of new business opportunities continue to be major concerns for the industry. Many companies remain deeply apprehensive about the future, with two thirds reporting activity down further in the fourth quarter of 2015 compared to the previous quarter,” Oonagh Werngren, Oil & Gas UK’s operations director, said.
“For the majority of respondents, job losses continue, with 54% of respondents reporting a reduction in headcount. Two thirds of respondents also reported falling revenues,” Werngren added.
However, progress in reducing costs is reported with again two thirds of respondents highlighting the intensive cost reduction and efficiency measures they are taking to keep their businesses competitive including reviews of internal practices, greater cooperation between client and supplier and the application of new technology to evolve smarter engineering solutions.
“Taking a co-operative approach to implementing efficiency measures will help the UK oil and gas industry weather the current downturn and ensure it emerges in robust shape to tackle future economic challenges,” Werngren added. “However, both fiscal and regulatory reform also have a key role to play in transforming the UKCS into a competitive, low tax, high activity basin that will be attractive to a variety of operators and support the continued development of the sector’s world-class supply chain.”
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