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4. The Business Environment
In Sum
m ar
y
T
he last year has seen signiĮcant changes to the ďusiness
e nv ir onm
e nt w it
h in w
h ich t
h
e oil and gas indust
r
y op
e
r at
e s.
ommodity Ɖrices and Ɖolitical and regulatory issues, most
notaďly redžit, haǀe dominated the agenda͘ Against this ďacŬdroƉ,
industry has Ɖursued eĸciency imƉroǀements aimed at driǀing
transĨormational change͘
solatility in oil and gas marŬets has continued oǀer the Įrst sidž months
oĨ this year, although there are some signs oĨ oil Ɖrice recoǀery Ĩrom
t
h
e r
e ce nt low s of 2016 . T
h
e av
e
r age dat
e d Br
e nt p
r ice w as
ϯ0 Ɖer cent higher oǀer the Įrst halĨ oĨ this year than in the same
p
e
r iod last y
e ar . T
h
e longe
r
-
t
e
r
m out look for oil p
r ice s r
e
m ains
unƉredictaďle, ǁith the maũor uncertainty ďeing the resilience oĨ
suƉƉly Ĩolloǁing the gloďal reduction in inǀestment͘
T
h
e av
e
r age NBP day
- ah
e ad gas p
r ice w as 40 p
e
r ce nt h igh
e
r ov
e
r t
h
e
Įrst halĨ oĨ 2017 than it ǁas last year, ďut the Ɖrice has droƉƉed ďacŬ
since͘ Although demand Ĩor gas is Ĩorecast to continue to rise oǀer
the nedžt decade, the Ɖace oĨ groǁth ǁill not match that oĨ suƉƉly in
a marŬet ǁhere Ɖroduction costs haǀe Ĩallen raƉidly oǀer recent years͘
Br
e
x it b
r ings anot
h
e
r m acr o-
e conom ic unce
r
t aint
y int o p lay t
h at
ǁill ďe considered ǁhen inǀestors are assessing oƉƉortunities on
the UK ^͘ In the shortͲterm, the ǁeaŬening oĨ ^terling in resƉonse
to redžit ǁas Ɖositiǀe Ĩor many oil and gas comƉanies, Ɖarticularly
p
r oduce
r s w it
h a local cost b ase and sup
p ly ch ain com
p anie s w it
h a
ƉroƉensity to edžƉort͘ ,oǁeǀer, in the long term, there are still a ǁide
range oĨ Ɖotential aƉƉroaches to hoǁ the UK ǁill leaǀe the U, each
ǁith diīerent imƉlications Ĩor the oil and gas industry͘ Oil & Gas UK,
on ďehalĨ oĨ its memďers, has emƉhasised to goǀernment the need to
maintain a strong ǀoice in uroƉe, enaďle continued Ĩrictionless access
to marŬets and laďour, and to Ɖrotect energy trading and the internal
e ne
r gy m ar ke
t .
sets out aspirations
for the industry
The average
Brent oil price was
30%
higher over the first half
of this year than the
same period last year
of the UK’s energy mix
will still come from oil
and gas by 2035
By the end of 2018
over
of total production
will come from start-ups
post-2016
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E conomic R eport 2 017
- F acts and F igures
sets out aspirations
for the industry
The oil and gas industry
supports over
T e average
Brent oil price was
30%
higher over the first half
of this year th n the
same period last year
The UK Government
forecasts that
of the UK’s energy mix
will still come from oil
and gas by 2035
The average NBP
day-ahead gas price was
over the first half of
2017 than the same
period last year
The industry could
deliver hundreds
of billions of pounds
in additional revenue
to the UK by 2035
300,000 jobs
in the UK
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40%
higher
omic R port 2 017
nd F igures
The oil and gas industry
supports over
The cost of industry
trade could increase
by as much as
per annum if the UK
reverts to World Trade
Krganinjation rules
£500
million
The average
Brent oil price w s
30%
higher over the first half
of this year than the
same period last year
The UK Government
forecasts t at
of the UK’s energy mix
will still come from oil
and gas by 2035
The average NBP
day-ahead gas price w s
over the first half of
2017 than the same
period last year
The industry could
Every £1 million of
industry expenditure
sustained around
17 jobs across the UK
economy last year
300,000 jobs
in the UK
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40%
higher
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