Economic Report 2013

2. Industry at a Glance

The following summarises the key findings of Oil & Gas UK’s Economic Report 2013 . Figures below refer to 2012, unless otherwise stated.

Security of Supply • Currently, oil and gas provide some 73 per cent of the UK’s total primary energy, with oil for transport and gas for heating being dominant in these markets. • In 2030, 70 per cent of primary energy in the UK will still come from oil and gas, according to the Department of Energy and Climate Change’s (DECC) latest projections. • If the current rate of investment is sustained, the UK’s Continental Shelf (UKCS) has the potential to satisfy close to 50 per cent of the UK’s oil and gas demand in 2020 (>50 per cent for oil, <50 per cent for gas). Economic Contribution • Production of oil and gas boosted the balance of payments by some £32 billion. • The supply chain in the UK generated more than £20 billion of sales from the UKCS. • Another £7 billion of supply chain sales were in the export of goods and services. • Offshore oil and gas remained the largest investing sector and the largest contributor to national gross value added (GVA) among the industrial sectors of the economy.

Oil and Gas Prices • The price for Brent oil averaged $112 per barrel, less than 50 cents higher than 2011’s average. • The oil price peaked at $128 per barrel in March 2012, before slipping to a minimum of $89 per barrel at the end of June and then recovering again. • The day-ahead gas price at the National Balancing Point (NBP) was relatively stable throughout the year, averaging 60 pence per therm, although it did spike to almost £1 per therm on 7 February 2012 because of supply constraints in mainland Europe caused by extremely cold weather. • The combined oil and gas price for UKCS production was, on average, $89 per barrel of oil equivalent (boe). Production • Production declined by 14.5 per cent from 2011 to 567 million boe, or 1.54 million boe per day. • TheUK remained the third largest producer of gas, and second largest producer of oil in Europe. The UK also remained in the top 25 global producers of both oil (20th) and gas (23rd) despite the sharp decline in production over the last two years.

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ECONOMIC REPORT 2013