Business Outlook 2018

The production outlook for the basin is much more uncertain post-2019. The lack of new project approvals and the recent low level of development drilling in the last few years, means it is likely that the UKCS will return to a position of production decline during the early 2020s. Continued investment is required to increase recovery from existing assets and ensure potential development opportunities progress to sanction so that any decline is carefully managed and does not revert to the trend seen from 2010-14. A production downturn will impact the UK economy and balance of payments, as more imports would be required to meet oil and gas demand, heightening concerns around the UK’s security of supply.

1

2

Figure 18: Production Outlook

3

1,000

900

4

800

)eob noilliM( noitcudorP launnA

700

600

5

500

400

6

300

200

100

7

0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: OGA, Oil & Gas UK

8

5.2 Expenditure Total UKCS post-tax expenditure was £15.7 billion in 2017, down from £16.9 billion in 2016 and less than half the level of 2013, as companies have adapted to the business conditions and tried to preserve cash flow. Although the focus on efficiency remains strong, early signs suggest expenditure may increase slightly this year as companies return to deferred operational activities and commit to new capital projects.

9

10

11

29