Business Outlook 2018
BUSINESS OUTLOOK 2018
Capital Expenditure As companies typically deferred or cancelled investments during the downturn and ongoing development projects reached their conclusion, the annual level of capital investment (capex) has fallen sharply since 2014. That trend was seen last year as capex fell to £5.6 billion, almost 20 per cent lower than start-of-year expectations and only a third of the peak of three years ago.
There are two key drivers behind the lower than anticipated capex in 2017:
• Low activity levels with only two greenfield capital projects approved • Efficiency gains in ongoing development projects meaning less capital is required
Figure 21: Capital Investment
Committed Expenditure Potential Upside
(£ Billion - 2017 Money)
2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: Oil & Gas UK, OGA
The outlook for the rest of the decade is more positive with up to 25 fields under discussion with the Oil and Gas Authority (OGA) for potential development approval. At least 12 of these, some of which comprise multiple fields, are at an advanced stage and are expected to proceed this year. As shown by Figure 22 opposite, more than £5 billion of associated development capex could be unlocked this year, the most in any year since 2013.
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