A new economic survey of the UK upstream oil and gas sector, published by the UK ...

A new economic survey of the UK upstream oil and gas sector, published by the UK Offshore Operators Association (UKOOA), has concluded that the sheer scale of the offshore oil and gas industry’s contribution to the UK economy underscores the need to maximise recovery of Britain’s remaining oil and gas reserves. The report adds that the key to the recovery is sustained investment and development of the new technologies capable of unlocking the field’s incremental reserves. The report argues there could be up to 36bn boe still to be recovered from around the British Isles, but cost reductions and application of new technologies must be implemented if the UK is to continue to attract investment and the government/industry production target of 3mn boe/d for 2010 is to be realised. The report also showed that: *Around 270,000 jobs throughout the UK are supported by the industry. *The industry has accounted for 18% of total UK industrial investment over the last 10 years. Development investment declined in 1999 to £3.2bn, representing 13% of total UK industrial investment. *When the UK’s overall trade balance in 1999 was in deficit by over £26bn, the value of UK oil and gas was $16bn, or 1.8% of the country’s Gross Value Added. *In 1999 offshore oil and gas accounted for 84% of the UK’s total primary energy production. *Treasury receipts from offshore taxes in 1999/2000 was £2.6bn. The industry has contributed a total of some £170bn (2000 prices) to the Inland Revenue since the 1970s. *The Treasury also stands to gain from the stronger crude oil prices with latest government forecasts predicting offshore tax revenues rising to some £5.3bn in 2000/2001, almost £2bn above previous estimates. For every $1 per barrel increase in the price of oil, it is estimated that tax revenues will rise by about £225mn in the first year and by about £300mn in each year subsequently.