The UK’s oil and gas sector needs investment of around £200bn to “add a generation of productive life” to the UK continental shelf, according to a report.
Oil & Gas UK’s Business Outlook 2019 said currently oil and gas provided 59% of UK energy demand and in 2035 this proportion would still be a third.
The report said to achieve target output of at least 1m barrels of oil equivalent per day (boepd) in 2035, around £200bn will need to be spent by exploration and production companies in areas including capital investment, supporting operations and decommissioning.
The report said this spend provided a “significant opportunity for the supply chain”. “New contracting models, increased collaboration and new ways of working are emerging, and this trend must continue to help unlock new projects and for the supply chain to be able to effectively manage demand in future.”
Oil & Gas UK said total UK production in 2018 was 1.7m boepd, with crude prices averaging $71.20 per barrel. Gas prices averaged 60p per therm, up 33% on 2017.
Production in 2019 is forecast to be 1.67m-1.73m boepd. Oil prices for the year ahead area expected to be $60-$65 per barrel.
Deirdre Michie, chief executive at Oil & Gas UK, said: “As we look ahead, oil and gas will have an important and constructive role to play in supporting this transition [to a low-carbon economy].
“UK government estimates show that by 2035, oil and gas will still be needed to meet two-thirds of the UK’s energy needs. Our industry currently provides almost 60% of that demand, underlining the criticality of this industry for security of energy supply, supporting hundreds of thousands of jobs and contributing billions to the economy.”
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