The oil and gas sector is likely to see a continued increase in activity in the ...

The oil and gas sector is likely to see a continued increase in activity in the coming year according to the most recent Aberdeen & Grampian Chamber of Commerce oil and gas survey, sponsored by Deloitte and conducted by the Fraser of Allander Institute. Business confidence continues to rise, with both producers and contractors remaining optimistic about developments in the UK Continental Shelf (UKCS). There are even stronger signs of increased activity amongst operators and contractors reported increases in the volume of tenders and work. Some 45% of contractors surveyed reported increased UKCS based activity over the past four months and 40% anticipate an increase on that in the next year. Meanwhile, 68% of contractors said that they were working at or above optimum levels in the North Sea; 70% reported working at or above optimum levels overseas. The survey results also showed the industry felt that an integrated UK Ministry of Energy would provide focus and priority to energy issues and, with its own seat in the cabinet, help address the lack of understanding by many of just how important the industry is to the UK economy. It would, some of the respondents believed, assist in long-term planning and maximise and promote British expertise as well as allowing for faster decision making and a streamlined approach to energy policy which at the moment falls between DEFRA (Department for Environment, Food and Rural Affairs) and the DTI (Department of Trade and Industry). However, despite these benefits a number of respondents were concerned that it would further politicise energy decisions, add more bureaucracy, not have enough ‘muscle’ within government and be difficult to resource. Concerns about the effectiveness of the current tax structure in supporting and encouraging R&D expenditure and in promoting recovery and production were also raised. Some 67% of operators and 52% of contractors surveyed regarded the UK tax structure as being more complex than in other European locations. The majority of operators thought that the UK offered less incentive to develop compared to other countries. However, it is hoped that the government’s new Stewardship Programme will go some way to stimulating activity and investment - although companies are looking for further tax breaks to encourage development plans.