The North Sea oil and gas industry’s recovery could be just over the horizon with a £2 billion cost improvement predicted by next year.
Oil & Gas UK’s annual report is published as thousands of delegates meet in Aberdeen for the Society of Petroleum Engineers’ Offshore Europe Exhibition.
The report today reveals the impact of the challenging business environment due to the drop in commodity prices which cut production and raised costs.
Improved efficiency was leading to an estimated 22% over £2 billion cut in operational costs of existing assets by the end of next year.
With the first annual production increase for 15 years, the report said the unit cost of operating UK oil and gas assets will also improve.
Mike Tholen, Oil & Gas UK’s economic director, said: “Strong investment in asset integrity over the last four years, coupled with measures to improve the efficiency of assets offshore, have resulted in better output from many fields.
“We expect the rate of decline in production from those fields to slow significantly over the next two years.”
With the Golden Eagle field starting up, Government data shows production in the first half of 2015 was 3% higher than the same period last year, indicating an annual increase.
Deirdre Michie, Oil & Gas UK’s chief executive, said: “I am confident that we have turned a corner with improvements in cost and efficiency.”
Retaining infrastructure and delaying decommissioning would be essential to prolong production and promote future developments if the oil price stayed low.
She also called for a further lightening of the industry’s tax burden.