Report Provides Insight into Oil and Gas Market
16th August 2012 18:13 - Oil and Gas
Research findings from Oil & Gas UK’s Economic Report 2012 provide a detailed look at the UK oil and gas industry. According to the report, oil and gas currently provides some 73 per cent of the UK’s total primary energy. Some of the key figures from the report are outlined below.
Production from the UK’s Continental Shelf (UKCS) satisfied 49 per cent of the country’s primary energy demand: 68 per cent of oil demand and 58 per cent of gas demand. In 2020, 70 per cent of primary energy in the UK will still come from oil and gas, even if the 15 per cent target for renewable energy is met.
The UKCS has the potential to satisfy close to 50 per cent of the UK’s oil and gas demand in 2020 if the current rate of investment is sustained.
The oil and gas industry paid £11.2 billion in corporate taxes on production in 2011-12, almost 25 per cent of total corporation taxes received by the Exchequer.
The oil and gas industry supported at least 440,000* jobs across the UK with:
32,000 directly employed by oil and gas companies and major contractors
207,000 in the wider supply chain
100,000 in jobs induced by the economic activity of employees and
100,000 in jobs exporting goods and services
Employment is spread across the UK, with the larger regional variances comprising:
Scotland – 45 per cent
South East England – 21 per cent
North West England – 6 per cent
West Midlands – 5 per cent
In 2011 the UK produced 656 million boe (barrel of oil equivalent), a reduction of 19.2 per cent from the 812 million boe produced in 2010. This is the biggest drop in year-on-year production ever recorded. The effect of this reduction has been felt by the UK economy as a whole. The Government was forced to reduce its forecast of tax receipts from the UKCS by £2.2 billion last year, despite oil prices being higher than anticipated.
Output of oil and natural gas liquids (NGLs) fell 17.5 per cent. This shortfall is the biggest year-on-year drop since the Piper Alpha disaster in 1988. Gas production also suffered, falling by an unprecedented 21.6 per cent.
The UKCS is a mature basin, but these reductions are much larger than expected.
*Numbers are based on analysis commissioned in 2010; this work is currently being updated and will be reported on later in 2012.
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