The UK oil and gas industry is expected to lose nearly 30,000 jobs over the next 12 to 18 months, media reports said. With that, the industry might see a dip in drilling activities by a third on the back of reduced investments and low energy prices as a result of the Covid-19 pandemic.
The industry is quite certain that drilling might reduce by over a third. This reflects a similar situation that occurred in 2016 owing to a drop in prices. Oil & Gas UK in a recent report said, “The outlook is bleak compared to the picture of steady growth seen only two months ago before the grip of the pandemic became clear. It is feasible that this year will see the UKCS experience negative cash flow for only the third time in the 40 years since the basin first saw positive cash generation.”
Oil & Gas UK is the country’s leading trade association for the offshore oil and gas industry. The trade body estimates the UK Continental Shelf’s production revenue could drop to 15 billion pounds in 2020. This estimate is based on an average Brent price of $40 a barrel, down from 24.5 billion pounds last year and 28 billion pounds in the previous year.
In another report, the trade body said, “The current commodity price environment will pose significant challenges across the UK offshore oil and gas industry. Lower prices will affect the revenues of all companies, further stretch balance sheets, and impact investment rates.”
Also, the industry’s capital investment is anticipated to drop between 20 percent and 30 percent this year, media reports said.