INVESTMENT in the UK oil and gas sector will hit a record high this year, as a ramp up in drilling activity looks set to boost the UK economy.
According to a report by trade body Oil & Gas UK out this morning, investment in the sector is forecast to rise to at least £13bn this year, providing a boon for jobs and industry.
Recent improvements in the tax regime have made oil and gas reserves commercially viable for development, the trade body said, with the 33 drilling projects that the Department for Energy and Climate Change has approved since 2012 involving £13.4bn in investment.
Oil & Gas UK said that 130 wells are forecast to be drilled over the next three years, compared with 33 a year from 2005 to 2008.
Norwegian oil major Statoil recently announced plans to develop a £4.3bn North Sea oil field, the largest offshore development in the UK in more than 10 years, in a sign that operators are ready to invest in the sector.
However, production from UK oil and gas fields fell 14 per cent last year to 1.55m barrels of oil equivalent a day, with much of the fall attributed to weakening investor confidence from the “numerous adverse” tax changes in the middle of the last decade, Oil & Gas UK said today.
“There is an over-riding case to maximise recovery of the UK’s oil and gas with 70 per cent of British energy requirements still likely to be met by oil and gas into the 2040s and the urgent need to identify and promote drivers for economic growth,” said Malcolm Webb, chief executive of the trade body.