UK oil and gas sector growing in confidence after ‘challenging’ years

Confidence in the outlook for the UK oil and gas sector has increased almost fourfold in two years, an industry survey found.

About two-thirds (68%) of companies plan to increase or maintain capital expenditure in 2019 – more than double 2017’s figure of 33% – according to an outlook report by DNV GL.

The risk assessment firm, a technical adviser to the industry, said the proportion who expect to raise or sustain operating expenditure has grown from 37% in 2017 to 72% for 2019.

A third of companies anticipate stricter cost efficiency to take hold this year, compared with 53% in 2018.

About two-fifths (41%) said they experienced price inflation from suppliers in 2018 while 44% expect suppliers to drive price inflation in 2019.

Skills shortages and/or an ageing workforce was the most cited barrier to growth.

Overall, 71% of UK firms were confident about the outlook for 2019, compared with 18% in 2017.

Oslo-based DNV GL surveyed 791 senior industry professionals from October to November last year.

Hari Vamadevan, oil and gas regional manager for the UK and west Africa, said: “The significant boost in expectations for spending are welcome signs of an industry that is, for the most part, prepared to close the chapter on a string of challenging years.

“However, this also brings new challenges for the sector in 2019, the hard-earned cost efficiencies developed over the downturn could be put to the test as we see early signs of cost inflation returning to the industry.”

Almost half (48%) of those surveyed expect to grow their workforce in 2019, compared with just 10% four years ago.

Business opportunities and competitive advantage topped the list of factors most likely to drive oil and gas companies to decarbonise operations in 2019.

More than a third (35%) said they were looking to increase investment in renewable energy this year.