- Author: Svein Inge Leirgulen
- Keywords: Oil & Gas
Robert Andrew Coveney
Robert Andrew Coveney
Head of Brand and Internal CommunicationsPhone: +47 48 18 15 05
VP Director of Communications, DNV GL - Oil & GasPhone: +47 415 60 264
The North Sea and Norway have become less attractive as investment destinations in 2014, according to oil and gas professionals surveyed in a new report released today by DNV GL, the leading technical advisor to the oil and gas industry.
According to the research, the UK and Norway have dropped from joint 4th position in 2012 to 7th and 9th place respectively in 2014. Meanwhile, China, Malaysia and Canada have moved up the ranks and the US, Brazil and Australia once again take the top spots.
The findings come from a new report, Challenging Climates: The outlook for the oil and gas industry in 2014, which was undertaken on behalf of DNV GL. The report provides a snapshot of industry sentiment about the year ahead and is based on a survey of more than 430 oil and gas professionals and in-depth interviews with more than 20 industry executives.
Europe’s headline findings for 2014:
- The UK and Norway drop from joint 4th position in 2013 to 7th and 9th place respectively for 2014. China, Malaysia and Canada have moved up the ranks and the US, Brazil and Australia once again take the top spots
- Confidence in the sector is lowest in Europe. Just 24% of those polled expressed strong confidence about the overall outlook for the oil and gas industry for 2014, compared with 44% in North America and 38% in Asia Pacific
- 20% of operators in Europe believe the oil and gas industry’s prospects for growth in 2014 are less certain than they were in 2013
- Executives in Europe express the least certainty about hitting their goals compared to those in the USA and Asia Pacific, although only 10% predict falling short on profits
- Nearly half (49%) cite skills shortages/the ageing workforce as a major concern.
Liv Hovem, DNV GL’s Divisional Director for Europe, says: “Uncertainty in the industry has a lot to do with cost, which is one of the biggest challenges for the year ahead. We’re seeing signs of a softening in the mega projects, but smaller projects are still happening. Capex is rising, but subsea is mitigating some of those costs and it’s a positive signal that investment in R&D will be highest in Europe, which will help ensure that mature fields remain viable and safe.”
An ongoing skills crisis is facing European operators and contributing to rising costs. The older base demographic and lack of qualified professionals entering the industry mean that skills shortages will be a major concern for operators in 2014. In fact, the skills shortage is cited as the number one barrier to oil and gas industry growth for the second year running, and was cited by nearly half (49%) of European respondents as the major concern.
During 2014, health, safety and environment (HSE) issues, particularly those related to the monitoring and management of safety barriers, will continue to develop as important priorities within the oil & gas industry.
Forty-four per cent of respondents believe that their companies’ current approach is not just defined by box-ticking, but will lead to a genuinely safer operating environment.
“A deeper industry safety culture is taking root. Companies have woken up to the fact that an HSE focus gives a competitive advantage. The dilemma is that it may put an additional pressure on costs and there could be a risk that cost cutting will affect the improvements that have been made in safety records, ” says Liv Hovem.
The allure of new reserves will mean operators continue to push the boundaries in terms of the new frontiers they pursue. Among European respondents, nearly one in five (19%) intends to expand into challenging territories in 2014. A further 28% plan to increase R&D efforts relating to the development of new technologies for challenging environments. Just under two-thirds (62%) of European oil and gas professionals agree that the financial demands of successfully operating in challenging environments make this far more suitable for larger operators rather than smaller players.
Almost a third of our survey respondents in Europe (31%) say that their companies intend to acquire partners with the specialist knowledge and skills they need as they move into tougher E&P sites. Collaboration is an important trend, particularly among European companies in the oil and gas sector, with almost three quarters of respondents (74%) saying they will need to increase alliances with others to share knowledge in order to cope with more challenging environments.