Economic Report 2019


2. Report at a Glance

The oil and gas industry makes a key economic contribution to the UK

Production of oil and gas contributed around £24 billion to UK GDP last year (1.2% of the UK total)

In 2018, it provided the equivalent of 45% of UK energy needs...



The industry is estimated to support around 270,000 jobs across the UK in 2019

...and 59% of oil and gas demand

Oil and gas production in the first six months of 2019 totalled 315 million boe, or an average of 1.74 million boepd The basin is attracting new investment. Almost $5.5 billion of M&A activity was seen in the first half of the year

Total production this year is likely be at the higher end of OGUK’s forecast, at around 630–640 million boe or 1.73–1.75 million boepd Production is being boosted by new projects and production efficiency , which is now at 75% — its highest level for a decade Industry is demonstrating decommissioning excellence and is halfway to achieving the target of reducing costs by 35% The UK oilfield services market is expected to return to growth in 2019 in line with increasing activity levels. However, many companies continue to see significant pressure on margins $66/bbl during the first half of 2019 — 7% lower than the 2018 full -year average of $71/bbl NBP prices hit a low of 23 p/th in June – the lowest daily spot price since 2016 and the lowest monthly average price since 2004. Brent crude averaged

Operating cost reductions are being sustained. Unit operating costs are expected to remain at around $15-16/boe in 2019

Drilling activity is increasing 8 exploration wells and 10 appraisal wells commenced drilling in the first seven months of the year — more than those drilled during the whole of 2018

The industry is also on track to drill more than 100 development wells for the first time since 2015

NBP gas prices averaged 40 p/th for the first half of 2019, 1 /3 lower than the 2018 average


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