According to the latest Oil & Gas UK 2013 Activity Survey, investments in the sector in the North Sea have reached their highest level for more than three decades.
Overall, some £11.4 billion ($17.1 billion) was invested in the UK's oil and gas industry in 2012 and it is predicted that the figure might surpass the £13 billion ($19.6 billion) mark this year. Indications for growth also come from the fact that the number of projects receiving developmental approval from the Department of Energy and Climate Change (DECC) nearly doubled in 2012 compared to the previous year, Independent.ie reported.
The report from the biggest industry trade association, Oil & Gas UK, revealed that the offshore oil and gas sector has the potential to boost the UK's economic activity and to help the country secure its prosperity in future. According to Malcolm Webb, chief executive of Oil & Gas UK, the increase in investment is good news for the whole British economy, especially because it comes after a period of two years of disappointment for the sector, caused by an unfavorable tax regime and sluggish investment.
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In addition to growing investment, the UK continental shelf is now enjoying a pickup in activity as far as new developments go, as well as the strongest performance of existing assets and infrastructure for more than 30 years, Webb noted. With the introduction of targeted tax allowances aiming to encourage the development of a number of strategic projects and with the government's plan to provide certainty on decommissioning tax relief, the British oil and gas industry is well positioned to grow. This, in turn, would make the UK a more appealing environment for overseas companies and independent businesses in the sector, Webb said.
Fergus Ewing, Scotland's energy minister, said that the report confirmed a positive trend that has been driving the Scottish oil and gas industry to growth. The investments made in the sector are much higher than in any other segment of the economy and this is a signal that the North Sea is becoming increasingly important on the global oil and gas industry map. For Scotland in particular, the industry is of crucial importance and the country is set to rely on it for decades to come, Ewing stated. It is estimated that over 50 percent of the reserves of oil and gas in the North Sea are still not extracted, suggesting that there are up to 24 billion barrels there to be used, with a potential value of £1.5 trillion ($2.25 trillion), he added.
However, Lang Banks, director of environmental charity WWF Scotland, commented that while the importance of the oil and gas industry for the national economy should be acknowledged, Scotland needs to start making plans to move away from dirty fossil fuels and begin to develop cleaner forms of energy. All the skilled engineers that are currently occupied in the oil and gas industry could make a real difference if they were to turn their attention to alternative energy resources and their development, Banks pointed out.
