It’s been hard not to miss the reports these past few days on how “bleak” the oil and gas industry is looking, or how it is “in a crisis”. The fall in oil prices would undoubtedly affect oil and gas contractors due to the rate cuts, reduced hours and terminated contracts on a weekly basis. However things may not be as bleak as they actually seem – there may still be hope for the oil and gas industry, and therefore hope for oil and gas contractors.
Although the oil and gas industry appears to be going through a bad phase, this is not to say that this cannot be rectified, if the right action is taken. Oil & Gas UK’s Activity Survey 2015 did not only reveal that things are currently looking a bit bleak for the oil and gas industry, it also revealed that the oil and gas industry actually has a lot of potential providing that the government and industry put in place the right measures to secure a long-term future. The longevity of the oil and gas industry is not only important for the people working in the industry, but also for the energy security that oil and gas production provides to the world. The North Sea and new fields need to be invested in to secure contracts and jobs, especially because otherwise oil and gas will just be left in the ground, unutilised despite their obvious capabilities to help.
There are barriers to oil and gas being used to their full potential, such as escalating costs, an unsustainably heavy tax burden and inappropriate regulation. Fortunately it seems likely that these problems will be tackled, with the 2015 Budget in March expected to give a new tax break for North Sea producers, meaning that continued investment in exploration and production will be more appealing to oil and gas contractor clients. IPSE Director of Policy and External Affairs Simon McVicker thinks that the tax breaks will have a very positive impact on oil and gas contractor prospects – they will hopefully help to boost investment for the industry and consequently strengthen the UK’s economic growth. Malcolm Webb, Oil & Gas UK’s chief executive, thinks that the government has already taken the right steps by conducting a comprehensive tax review before the extreme drop in oil prices. He believes that we need a permanent reduction in the headline rate of tax, a simplification of the tax allowance structure and stimulus for exploration, and that together we must do what’s required to reduce costs, encourage investment, and avoid premature decline.
So it seems that the so-called “bleak” oil and gas industry isn’t so bleak after all! There is the opportunity for the problems to be tackled, and if they are then plenty of contracting opportunities will open up in the oil and gas industry. If you’re an oil or gas contractor and would like to talk about your experience contracting in the oil and gas industry, then please feel free to comment below or share your experience in our LinkedIn group.