UK oil and gas sector optimism falls to new low

Deteriorating market conditions and the scarcity of new business opportunities continue to be major concerns for the industry

Companies in the UK oil and gas industry are increasingly pessimistic about their business prospects according to Oil & Gas UK’s Q4 2015 Business Sentiment Index.

The report reveals that optimism in the sector is at its lowest since the index began in 2009. The index has remained in negative territory for the sixth quarter in a row, with a score of -32 on a -50/+50 scale.

Oonagh Werngren, Oil & Gas UK’s operations director, said: “The deteriorating market conditions and the scarcity of new business opportunities continue to be major concerns for the industry. Many companies remain deeply apprehensive about the future, with two thirds reporting activity down further in the fourth quarter of 2015 compared to the previous quarter.

"For the majority of respondents, job losses continue, with 54% of respondents reporting a reduction in headcount. Two thirds of respondents also reported falling revenues.”

However, progress in reducing costs is reported with again two thirds of respondents highlighting the intensive cost reduction and efficiency measures they are taking to keep their businesses competitive including reviews of internal practices, greater cooperation between client and supplier and the application of new technology to evolve smarter engineering solutions.

Werngren added: “Taking a co-operative approach to implementing efficiency measures will help the UK oil and gas industry weather the current downturn and ensure it emerges in robust shape to tackle future economic challenges. However, both fiscal and regulatory reform also have a key role to play in transforming the UKCS into a competitive, low tax, high activity basin that will be attractive to a variety of operators and support the continued development of the sector’s world-class supply chain.”