Economic Report 2019

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Crucial to maintaining energy security

4. Business Environment and Industry Performance

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UK industry must remain internationally competitive to unlock new opportunities Oil and gas production contributed over £24 billion to UK GDP in 2018

UKCS production is equal to 45% of UK energy needs

In Summary G lobal markets continue to show significant volatility. The Brent crude spot price experienced a 38 per cent swing in the first half of 2019 and the monthly average National Balancing Point (NBP) gas price fell by more than 50 per cent between January and June, reaching the lowest monthly average since 2004. These trends continue to drive E&P company strategies with robust cost control being required and only the most attractive investment opportunities gaining approval within competitive global portfolios. To ensure that the UK economy continues to benefit from indigenous production, it is essential that the industry responds effectively to the energy transition and in line with Roadmap 2035 . To achieve this, the industry — along with government and regulators —must remain focused on maximising economic recovery (MER) and maintaining the correct framework to attract and retain investment in the search for new resources and their subsequent development. Whilst pursuing MER, the industry will continue its focus on reducing its carbon intensity from production activities, consistent with achieving a net-zero economy in 2050. Good progress is being made in a number of areas: the recent growth in production has continued, drilling activity is increasing and the basin continues to attract new investors. However, there are persisting challenges, particularly around the enduring sustainability of the supply chain, which also needs to view the UK as a good place to invest. Innovative contracting models, partnerships and collaboration across industry can ensure that new opportunities are progressed while achieving value for all parties. By getting the balance of risk and reward right, the oil and gas industry will continue to make a vital contribution to the UK economy in the decades to come, whilst also helping to advance the transition to a net-zero economy. The UK il and gas industry supports the ambition to achieve a net-zero c rbon economy UK industry must remain internationally competitive to unlock new opportunities Crucial to maintaining energy security UKCS production is equal to 45% of UK energy needs UKCS production continues to grow, ow meeting 59% of oil and gas demand 59% UK industry must remain internationally compe tive to unlock new op ortunities Oil and gas production co tributed over £24 b llion o UK GDP i 2018 Crucial to maintaining nergy security

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The UK oil and gas industry supports the ambition to achieve a net-zero carbon economy UKCS production continues to grow, now meeti g 59% of oil and gas demand The oil and gas industry supports around 270,000 jobs across the UK 59%

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Oil and gas will continue to make a vital contribution to the energy mix and energy security post-2050 Drilling activity is increasing – more E&A wells have been drilled so far in 2019 than in the whole of 2018

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The industry has

The UK oil and gas

Oil and gas will continue