Hopes rise for UK offshore recovery
Further signs that the UK offshore industry is convinced its slow-rolling economic recovery is continuing to gather steam came today with the latest Aberdeen Chamber of Commerce (ACC) oil and gas survey for the Grampian region of Scotland.
LONDON�Further signs that the UK offshore industry is convinced its slow-rolling economic recovery is continuing to gather steam came today with the latest Aberdeen Chamber of Commerce (ACC) oil and gas survey for the Grampian region of Scotland.
The commercial optimism reported in the ACC's March survey, according to the most recent report, has been buoyed by the belief among those companies polled�49 "larger" representatives from the oil service sector and 3 operators�that the upward movement in oil prices and revenues is encouraging oil companies to reassess their capital spending in the UK North Sea.
Among the key findings from the survey, carried out by the UK University of Stirling's Fraser of Allander Institute, were: 41% of respondents are more confident than three months earlier, 42% report increased exploration-related work, 63% anticipate increased levels of work overseas, 63% anticipate rising levels of production and service work, 67% are concerned about future levels of demand constraining activity, and 53% have sought to recruit staff in the last three months.
This rising trend in "business confidence" was explained by one of the report's authors, Cliff Lockyer, as a direct function of the 35% hike in oil revenues�reported by the Royal Bank of Scotland�between April 1999 and the same month this year.
But the report's authors also cautioned against the industry pinning its hopes on the UK North Sea industry rebounding in the near term.
"As we have noted in previous reports," said its authors, "the continued merger activity, post-merger rationalizations, and more attractive options elsewhere, coupled with the continuing need for cost reductions and lower business volumes, may delay an upturn in UK-based project activity."
A promising development was a halt to the steady slide in exploration-related work, with 42% of companies polled reporting an increase�compared to 34% reporting a decline in the last quarter�though this figure was still said to be "slightly weaker than had been anticipated."
Commenting on the report, which covers the period from April to the end of June, ACC Chief Executive Amanda Harvie suggested last year's downturn was "slowly becoming a bad memory," as overseas activity and increased investment in the North Sea begins to take root.
"The respondents in our survey are definitely more confident than they were in March this year," said Harvey. "Only this month, BP announced an investment of $900 million in the North Sea for 2000, and promised the same for 2001. This is bound to support the rise in the total volume of production and service work highlighted in the report."