Economic Report 2017

E C ONOM IC R E P OR T 2 0 1 7

2. Industry at a Glance conomic ontriďution

omƉanies inǀolǀed in oil and gas actiǀity

ͻ Last year, oil and gas Ɖroǀided 7ϲ Ɖer cent oĨ the UK͛s Ɖrimary energy, ϲ0 Ɖer cent oĨ ǁhich ǁas satisĨied Ĩrom indigenous p r oduct ion m aking an e st im at e d cont r ib ut ion of £ 17 b illion t o t h e UK’ s b alance of t r ade . • Oil and gas w ill st ill p r ov ide t w o- t h ir ds of t ot al p r im ar y e ne r gy ďy 20ϯϱ, according to the eƉartment Ĩor usiness, nergy & Industrial ^trategy, and thereĨore needs to ďe a ǀital comƉonent oĨ an energy Ɖolicy that considers aĨĨordaďility, se cur it y of sup p ly and e nv ir onm e nt al sust ainab ilit y .

• L at e st e st im at e s sh ow t h at t h e oil and gas se ct or cont inue s t o suƉƉort oǀer ϯ00,000 ũoďs in the UK͘

• T h e UK oil and gas sup p ly ch ain sp ans t h e le ngt h and b r e adt h oĨ the country, serǀicing ďoth domestic actiǀities and edžƉorting alm ost £ 12 b illion of goods and se r v ice s t o ot h e r b asins ar ound t h e w or ld.

Security of Supply

The Energy Trilemma

Aīordaďility £

Environmental Sustainability

T h e Busine ss E nv ir onm e nt

ͻ Oil marŬets remain ǀolatile, although dated rent aǀeraged Ψϱ1͘ϲ Ɖer ďarrel ;ďďlͿ oǀer the Ĩirst sidž months oĨ the year, 30 p e r ce nt h igh e r t h an ov e r t h e sam e p e r iod in 2016 . • A sh or t age of st or age and unce r t aint y ov e r liq ue fie d nat ur al gas car goe s cause d t h e NBP day - ah e ad gas p r ice t o r ise ab ov e ϲ0 Ɖenceͬtherm ;ƉͬthͿ in &eďruary, ďeĨore the marŬet fundam e nt als of st r uct ur al glob al ov e r sup p ly le d t o a sh ar p fall t o 25 p / t h b y J une . • W e ake r st e r ling im p r ov e d m ar gins for m ost oil and gas p r oduce r s and m ade e x p or t s m or e com p e t it iv e for b usine sse s acr oss t h e sup p ly ch ain. ͻ The longͲterm imƉact oĨ redžit is uncertain, ǁith analysis sh ow ing t h at t h e cost of t r ade for t h e w h ole indust r y could incr e ase b y as m uch as £ 5 00 m illion p e r annum if t h e UK r e v e r t s to torld Trade Organinjation rules, or could ďe reduced ďy ar ound £ 100 m illion unde r op t im al t r ade agr e e m e nt s.

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