How much could your business save?Find out now!
Or, you can call us on:0800 411 8830

Falling oil prices threaten North Sea oil industry


The fall in oil prices over the last few months has been a welcome relief to car owners but the UK oil industry has warned that it is in crisis as prices continue to drop.

Service providers and oil companies are not taking on any new workers and are looking at cutting staff and investment.

The outlook for North Sea oil isn’t good. Much of the oil in the North Sea now involves deep sea drilling which isn’t profitable if oil falls below a certain level. Chairman of the independent explorers’ association Brindex Robin Allan said that no new projects in the North Sea are profitable with oil below $60 a barrel.

He said the industry would adapt but the process would involve job losses and reducing costs wherever possible. Speaking to the BBC he said there wouldn’t be any new investment and budgets for 2015 were being cut.

Big oil companies are already cutting jobs including ConocoPhillips which is cutting 230 jobs in the UK and announced a 20% reduction in worldwide capital expenditure budget.

Service providers including Schlumberger are also being affected by the fall in oil prices. Schlumberger recently cut back on its UK based fleet of geological survey ships, which resulted in an $800 million loss. The company is also reducing new recruitment and cutting a number of jobs. However, the company has also just won a big contract with Statoil providing drilling and well services off the coast of Shetland.

North Sea oil production has been in decline for a number of years now and earlier this year Opec (Organisation of the Petroleum Exporting Countries) warned that output from the North Sea could drop to an average of 800,000 barrels a day. Almost two years ago investment in the region was at its highest for 30 years with expectations that this would increase especially when the government introduced tax incentives to boost investment in difficult projects.

The fall in oil prices has put this new investment in doubt and could prove to be a huge setback for North Sea oil. However, Sir Ian Wood, a leading figure in the oil industry, believes prices will stay around $60-$65 a barrel for the next 18 months or so and then recover. Warnings that the oil industry is close to collapse are too dramatic he says although he does admit jobs will be lost over the coming months.

Related Articles

energy news 21/01/2017

Energy News – 21/01/2017

The week of Donald Trump’s inauguration has seen shaky energy markets, a landmark Brexit speech by Theresa M...

Read More
how business leaders avoid burnout

How business leaders avoid burnout

When you’re a small business owner the buck stops with you, which can make it incredibly difficult to sw...

Read More
how to make 2017 your best year ever

How to make 2017 your best year yet

Whether you heaved a sigh of relief when 2016 ended, or said goodbye to the year with sadness, we have some ti...

Read More
Excellent, 9.6 / 10

Thanks Mark...

"Mark was very helpful and had all the answers to the questions I had - would go back to him time and time. Thanks Sir"

This review was posted by Wayne Nugent - Mailing Guy on the 20th of January 2017

Switch Business Electricity Contract

"Very good & efficient service - good range of prices offered from variety of suppliers"

This review was posted by SALLY DOLMAN on the 20th of January 2017

Cheerful, helpful service.

"Aaron Gallagher was my contact at SwitchMyBusiness.com. Aaron was cheerful and helpful he made switching our electricity supply easy and painless giving an understandable explanation each step of the way. I would quite happily recommend this company and Aaron Gallagher to anyone given the task of arranging a new energy contract."

This review was posted by Pam Johnson on the 19th of January 2017

Kyle Wright - Excellent Service

"Dealt with the above on two occasions now and has made the process of switching energy suppliers very easy. Very Polite and helpful person, will defiantly want to deal with again."

This review was posted by Skyline32 on the 19th of January 2017

Made this a very simple transaction!

"Aaron was polite, friendly and extremely helpful, making this potential chore a very easy transaction. He explained everything thoroughly and answered all my questions and I feel very confident that the whole transition will go very smoothly and I am aware of what to expect as the process moves forward. Thanks Aaron!"

This review was posted by Lesley Clayton on the 18th of January 2017