Daily Management Review

Plunge in Oil Prices has Left 5000 Jobless in the North Sea Oil Fields in One Year


Plunge in Oil Prices has Left 5000 Jobless in the North Sea Oil Fields in One Year
The declining global oil prices have not only shattered the market but have also resulted in the loss of than 5,000 jobs since last year in the North Sea oil and gas sector.  
This data was revealed by the Oil and Gas Authority (OGA) says.
The UK oil industry is facing a huge crisis as its oil production fell to its lowest level since output started in the mid-1970s. Many oil companies and operators have announced their intention to decommission unprofitable oil fields early as old fields run out of resources.
Since June 2014, the global Brent crude prices have fallen nearly 55 percent and the price that once hovered around the $120 per barrel mark now average around $50 per barrel. This has hit the North Sea oil production hard as the costs of production in these fields is some of the industry's highest operating costs due to the maturity of the basin.
"Regrettably, this has led to the loss of around 5,500 jobs since late 2014," Andy Samuel, chief executive of the OGA, said in a report summarising the newly-created body's first months.
With the aim to help North Sea operators squeeze as much oil and gas out of the basin as possible, the OGA was established as an executive body five months ago. However in very recently, large oil companies and operators like Shell, BP, Chevron and ConocoPhillips all announcing staff cuts this aim has become increasingly difficult to achieve.
More than 375,000 people are employed directly in the UK’s oil and gas sector and despite the falling oil prices and consequent revenues, the sector has been an important source of tax revenue. The rate and scale of job curtailments in the sector has raised concerns about future shortage in skill and experience the sector.
Immediate commercial discussions between companies involved in the running of Theddlethorpe gas terminal and the Sullom Voe terminal on the Shetland Islands were organized by the OGA. However these key facilities in the North Sea are expensive to operate.
"We should be in no doubt about the scale of the challenge ahead," Samuel said.
On the other hand, Scottish Conservatives say that the North Sea oil revenue plunged to an all-time low in the first quarter of this year. According to its quarterly national accounts, the Scottish government it received £168 million in tax receipts from the oil and gas industry between January and March which was drastically lower than the £969 million in the same period last year, the Scotsman has reported. 

Oil producers have had to make job cuts, as well as pull back from their more costly projects, after a supply glut has sent brent, the global oil benchmark fell from a high of around $107 per barrel in June last year to about $45 per barrel at present.  

"The plunge in oil revenues for the first three months of this year is ncredible. Whichever way you look at it, and with the best will in the world, there is just no way an independent Scotland could survive on this," Murdo Fraser, Scottish Conservative finance spokesman, said.

"We knew the price of oil was volatile, and that this would be a risk. But to see such a radical drop is alarming. Thankfully, within the strength of the UK, this shock can be absorbed," he added.