There are currently 271 projects proposed or under development on the UK Continental Shelf (UKCS) and the Norwegian Continental Shelf (NCS) and a total potential investment of US$262.3 billion.
These were among the topline figures according to the Energy Industry Council (EIC)’s latest report into contracting activities offshore Norway and UK based on EICDataStream, the EIC’s global project database that tracks over 10,000 active and future projects worldwide.
Image: Fig 3.
According to EICDataStream, between January 2010 and July 2014 there were 482 major contracts (FEED, EPC and SURF) awarded on projects offshore UK and Norway: 203 EPC (engineering, procurement and construction) contracts, 170 Subsea/SURF (subsea, umbilicals, risers and flowlines) contracts, and 109 FEED (front end engineering design) contracts.
Yet, despite the continued activity, there has been a decline in the number of contracts awarded since 2011. Based on figures so far this year, the number of EPC contracts has suffered the most serious decline since 2012, followed by the number of Subsea/SURF contracts, while the number of FEED contracts awarded so far in 2014 is close to reaching 2013 figures.
According to the report, activity in Norway peaked in 2011 to 2012 and has entered fairly rapid decline since, with just six major contacts awarded in 2014, up until July (see figure 2). Activity in the UK also peaked in 2011, but has declined at a steadier rate, with 16 major contracts in 2014, up until July (see figure 3).
Image: Fig 2.
In contrast to the UK, where the Government has introduced a number of tax allowances in the last few years, the Norwegian oil and gas industry is being impacted by the introduction of new tax rules in 2013, in addition to high costs. The increase has seen a number of operators delay developments to reconsider development concepts under the new tax regime, Statoil’s Snorre and Johan Castberg projects being two such examples.
“While both the UKCS and NCS have seen a decline in contract activity, this report shows that there are still reasons for optimism and that offshore UK and Norway will continue to see high levels of activity,“ said Neil Golding, Head of Oil & Gas at the EIC.
He continues: “The focus on enhanced recovery, increase in tie-ins between marginal fields, the hoped for increase in exploration drilling, as well as the continued commitment to development from operators will provide key engines for growth over the next few years. However this can only be achieved with government support for the UK and Norwegian offshore industry.”
To find out more about the EIC visit the UK Pavilion at ONS and the EIC stand – 980 in Hall J.
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