LONDON -- Oil and gas production companies in the UK are more positive about the economic outlook than at the turn of the year, according to a new quarterly business confidence index from Oil & Gas UK. However, that optimism is not shared within the industry’s supply chain, the association adds, with the economic downturn still impacting the activities and revenues of the marine, subsea, drilling and well services sectors in particular.
The new index measures the relative performance of the various sectors in the offshore industry against nine economic indicators, with the aim of providing a better insight into the industry’s overall health on the UK shelf. Companies are canvassed at the end of each quarter about changes in investment, revenues, operational costs, manpower, day rates, R&D expenditure, employment, training, general business confidence, and activity.
Three surveys have been carried out to September this year. The main findings are:
• Confidence amongst exploration and production (E&P) companies appears to be more positive than among businesses in the supply chain
• Independent production companies are more optimistic than the major, integrated companies concerning overall business confidence, investment, activity growth, and business revenues
• The prevailing economic climate appears to have hit the drilling and well services and marine and subsea services sectors hardest
• Supply chain companies are still feeling the impact of reduced activity and postponed investment, but the industry appears intent on retaining its skilled workforce, only resorting to job cuts where there is no alternative
• The pressure to reduce costs and raise competitiveness is still an issue. E&P companies responded early to fluctuations in the oil price and are now more confident on delivering their enacted programs. However, companies in well engineering and drilling, marine, and subsea services are still striving to suppress costs in their businesses in order to stay competitive.
“In 2010, it will be a strategic priority of Oil & Gas UK and its newly formed supply chain directorate to address the issues arising here,” says Paul Dymond, Oil & Gas UK’s operations and supply chain director.
UK activity index reveals mixed picture
Oil and gas production companies in the UK are more positive about the economic outlook than at the turn of the year, according to a new quarterly business confidence index from Oil & Gas UK.