Economic Report 2017

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ost reductions haǀe not only ďeen commonƉlace Ĩor oƉerational assets, ďut also Ĩor those under deǀeloƉment͘ Again, the Ɖrogress made in the UK has ďeen greater than in other ďasins, ǁith &igure 2ϰ shoǁing the edžƉected traũectory oĨ the UK ^ ǀersus the Eorǁegian ontinental ^helĨ͘ Eot only haǀe UK costs droƉƉed Ĩurther, they also ap p e ar le ss p r one t o ne ar - t e r m inflat ion. R e sp onde nt s t o an int e r nat ional sur v e y car r ie d out b y W ood M acke nz ie Ĩelt that around tǁoͲthirds oĨ UK ^ cost reductions seen across suďsea caƉital Ɖroũects ǁould ďe sustained out to 2020 e v e n if t h e m ar ke t p icks up .

Figure 24: Supply Chain Cost Trajectory for Subsea Developments

2 015

2 016

2 017

2 018

2 019

2 02 0

0%

UK N orw ay

- 5 %

- 10%

- 15 %

- 2 0%

- 2 5 %

Av erage Subsea D ev elopment Cost R eduction

- 3 0%

Source: Wood Mackenzie

Although the UK reƉresents a more attractiǀe destination Ĩor inǀestors than it did tǁo years ago, there is noǁ le ss cap it al av ailab le t o com p e t e for . R e v e nue unce r t aint y cr e at e d b y t h e p r ice dow nt ur n h as cause d inv e st or s to distance themselǀes Ĩrom oil and gas oƉƉortunities͘ tood DacŬennjie estimates that oǀer Ψ1 trillion has ďeen cut Ĩrom gloďal uƉstream inǀestment ďudgets ďetǁeen 201ϱͲ20͘ ^o, ǁhile the UK has imƉroǀed its relatiǀe comƉetitiǀeness, this has ďeen oĨĨset ďy the Ĩact that the aƉƉetite Ĩor oil and gas inǀestment has shrunŬ gloďally͘

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