Oil & Gas UK Economic Report 2014

2. Industry at a Glance

1

2

The following summarises the key findings of Oil & Gas UK’s Economic Report 2014 . Figures below refer to 2013, unless otherwise stated.

3

Security of Supply • Oil and gas provided more than 70 per cent of the UK’s total primary energy, with oil for transport and gas for heating being dominant in these markets. • In2030, 70per cent of theUK’s total primary energy is still expected to come from oil and gas, according to the Department of Energy & Climate Change (DECC). • If the current rate of investment is sustained, the UK’s Continental Shelf (UKCS) would continue 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 £30 billion. • 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. • The supply chain in the UK generated over £20 billion of sales from the UKCS (in 2012). • In addition, almost £15 billion of supply chain sales were in the export of goods and services (again, in 2012).

Oil and Gas Prices • The price for Brent oil averaged $109 per barrel, slightly lower than the averages of $112 in 2012 and $111 in 2011. • The oil price was remarkably stable throughout the year, with dated Brent crude oil trading mainly in a narrow range of $105-110 per barrel. • The day-ahead gas price at the National Balancing Point (NBP) rose to an average of 68 pence per therm (p/th) from 60 p/th in 2012. • The combined oil and gas price for UKCS production was, on average, $90 per barrel of oil equivalent (boe); it was $89 per boe in 2012. Production • Production declined by eight per cent from 2012 to 524 million boe, or 1.44 million boe per day 1 , a decline rate about half of that in 2011 and 2012. • The UK remained the second largest producer of oil in Europe, after Norway, and the third largest producer of gas, after Norway and the Netherlands. • The UK also remained in the top 25 global producers of both oil (25th) and gas (22nd), despite the sharp decline in production in recent years.

4

5

6

7

8

1 N.B. These are net production figures, after deducting the industry’s own consumption.

11

ECONOMIC REPORT 2014