Oil & Gas UK Economic Report 2015

2. Industry at a Glance

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The following summarises the key ndings of Oil & Gas UK’s Economic Report 2015 . Figures are given in 2014 money unless otherwise stated.

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Economic Contribution • The supply chain in the UK generated over £39 billion of sales in 2013 with similar figures estimated for 2014. These supply chain sales included over £16 billion of export of goods and services (in 2013). • Offshore oil and gas extraction, last year, was the sixth largest contributor to national gross value added among the 37 production, manufacturing and construction sectors in the UK economy. • Production of oil and gas boosted the balance of payments by £25.2 billion in 2014. • The industry paid £2.2 billion in corporate taxes on production in 2014-15, the lowest in over 20 years because of falls in oil price and as a consequence of recent investments. • Since 1970, the industry has paid over £330 billion in such taxes. Employment • It is estimated that the UKCS currently supports around 375,000 jobs 1 , most of which are highly skilled and well paid. • This reflects an estimated 15 per cent contraction in employment since its peak at around 440,000 at the start of 2014. • Cost reductions and efficiency improvements are key to ensuring the UKCS attracts fresh investment over the remainder of this decade, which is critical to future employment prospects of the basin.

Energy Supply • Oil and gas provided 68 per cent of the UK’s total primary energy in 2014, with oil for transport and gas for heating being dominant in these markets. • In 2030, 70 per cent of the UK’s total primary energy is expected to come from oil and gas, according to the Department of Energy & Climate Change (DECC). • The UK Continental Shelf (UKCS) continues to satisfy just over 50 per cent of the UK’s oil and gas demand. Import levels are expected to rise to 74 per cent by 2030. Oil and Gas Prices (money of the day) • The price for Brent oil averaged $99 per barrel (bbl) in 2014, lower than the nominal averages of $109 in 2013, $112 in 2012 and $111 in 2011. • The price for Brent oil averaged $76/bbl in the fourth quarter of 2014 as the price fell rapidly from a peak of $110/bbl in June. • Over the first six months of 2015, the price for Brent oil averaged $58/bbl. • The month-ahead gas price at the National Balancing Point fell to an average of 51 pence per therm (p/th) over 2014 and has averaged 46 p/th over the first six months of 2015.

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1 This number reflects direct, indirect and induced employment. Direct employment – those employed by companies operating in the extraction of oil and gas and associated services. Indirect employment – employment as a result of supply chain effects caused by oil and gas sector activity. For these companies, extraction of oil and gas and associated services will be one part of a wider business. Induced employment – employment supported by the redistribution of income from the oil and gas sector.

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ECONOMIC REPORT 2015