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Executive Summary

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EXECUTIVE SUMMARY

This report covers the UK offshore oil and gas industry. In 1999, total sales were estimated to be worth around £19.56bn. The output of oil was 137 million tonnes, while the output of natural gas was 99.6 million cubic metres. In 1999, the UK was a net exporter with exports worth £6.17bn, well above imports of £2.29bn. Oil and gas were first recovered from the UK Continental Shelf (UKCS) in 1975, since when the industry has grown to maturity. Discoveries made in the past 5 years have been smaller than the earlier finds. Moreover, they are often in areas which are not easy to develop economically. However, technological innovations, e.g. using subsea installations to connect them to existing infrastructure, are providing commercially viable means of development. Leading players in the industry include BP Amoco PLC, Shell UK Ltd, Amerada Hess Ltd, Enterprise Oil PLC, Hydrocarbon Resources Ltd and Chevron UK Ltd. Most of the participants are of US origin. Oil is transported ashore at UK terminals and refineries, of which there are 13 currently operational in the UK. Most of the oil produced is used for transport fuel, while gas is used increasingly for electricity generation, as well as the domestic gas supply. The industry’s infrastructure requires a vast range of structures, equipment and components. There is also an important need for consultancy and design services of various kinds. Issues facing the industry include potential competition from foreign gas/oil sources, the increasing burden of decommissioning offshore installations, and environmental concerns. Oil prices are a critical factor in the future development of the UK offshore industry. Following a rise in output to 2002, Key Note forecasts that output will begin to fall in 2003, with production standing at 136.9 million tonnes in 2004, worth £9.8bn. Gas output is forecast to rise during the next 5 years and will be less sensitive than oil to global economies and politics. Between 2000 and 2004, production is forecast to rise by 15.2 percent to 121 billion cubic metres, with a value of £6.6bn.

Text © 2000 Key Note

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Last updated by Duncan Nottage 5th July 2000