Oil & Gas UK: Industry somewhat less pessimistic

Oil & Gas UK, a body representing offshore oil and gas companies in the UK, has this week published Business Sentiment Index for the third quarter of 2015.

According to Oil & Gas UK, the report shows that while the UK oil and gas industry remains very concerned about the future, there has been a slight rise in optimism with respondents returning a score of minus 25 on a -50/+50 scale, an increase of two points from minus 27 reported by the survey in the second quarter of the year.

As a regular survey of around 1,500 representatives from both operator and contractor companies, the Business Sentiment index typically elicits a 10 to 15 per cent response rate, Oil & Gas UK says.

It measures a number of economic indicators, including business confidence, activity levels, business revenue, investment and employment with a higher rating (above zero) indicating a more positive outlook and a lower rating (below zero) expressing a more negative opinion.

Oonagh Werngren, Oil & Gas UK’s operations director, said: “While the overall index remains in negative territory for the fifth quarter in a row, there is a slight improvement in mood for the second quarter in succession. Respondents cite the positive impact of efficiency initiatives, such as improved management of inventory levels, business process reviews plus engaging with the workforce for ideas for efficiency improvements, as reasons for optimism. Some respondents also indicated a positive outlook regarding potential opportunities in the decommissioning market.”

She added that the slight rise in optimism, however, is counter-balanced by a large number of companies expressing concern about future activity levels, with 55 per cent reporting lower activity than the second quarter of 2015. Werngren said that Job losses continue to be a matter of concern to the majority of respondents, with just over 60 per cent indicating that headcount has already been or will be reduced.”

Werngren said:“While the industry continues to operate in a tough business environment, exacerbated by the lower oil price, there is evidence to suggest that companies are increasingly responding to the challenge of improving production and production efficiency in the UKCS. There will be an opportunity to hear about progress in this area when Oil & Gas UK holds a breakfast briefing in Aberdeen on December 8 to share information on production efficiency and the latest developments in exploration.”