LONDON, Sept. 9 (UPI) — The British energy sector should brace for more staff reductions as companies take steps to endure the weak crude oil market, industry body Oil & Gas U.K. said.
The industry’s lobbying group in its annual report said new spending in exploration and production is expected to fall by up to $6 billion per year over the next three years for its lowest levels since the 1970s.
“This great industry of ours is facing very challenging times,” the group’s chief executive, Deirdre Michie, said in a statement.
Michie’s group in an early 2015 report said the market outlook was “bleak.” The government’s overseer, British Oil and Gas Authority, this week called on companies to consider “all possible alternatives” to layoffs. Job losses in the industry have passed 5,000 since late last year.
Employment in the British energy sector is down about 15 percent since the start of 2014 and Michie said the industry will continue to face an uncertain future.
“It is likely that capacity may have to be reduced still further in order for the business to weather the downturn,” she said.
The government authority concurred, saying there should be “no doubt” about the scale of the challenges ahead.
Separate analysis from energy consultant group Wood Mackenzie finds around 140 oil and gas fields operating in British waters will cease operations even if oil prices recover 70 percent of their value within the next five years.
Michie remained upbeat about the future, however, saying there’s still value in offshore oil and gas reserves.
“Maximizing the recovery of our oil and gas resource will strengthen the country’s energy security, boost tax revenues, exports and the balance of payments as well as sustain high value activity and jobs in our world-class supply chain,” she said.
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