According to the following article as many as 100,000 British oil jobs are at risk. Especially troubling is the contention that the big oil companies are planning to slash North Sea capital outlays still further in the year 2000 if oil prices remain depressed. Big trouble for the OSX if the market starts to anticipate further deep cuts in capex next year.
City: Cash cuts put 100,000 oil jobs at risk
The Daily Telegraph London
MORE than 100,000 jobs are at risk following a dramatic slump in investment in the North Sea
oil industry, according to internal industry figures.
Spending is forecast to more than halve this year to about pounds 2bn from more than pounds
4.5bn in 1998 with a further fall to pounds 1bn expected in 2000, due to the low price of oil
which has made many of the North Sea's fields uneconomic.
The figures reflect a prolonged slump in the price of oil, which is now languishing at about $10 a
barrel. The gloomy forecasts will almost certainly be used by oil companies as they lobby for tax
relief from the chancellor in his forthcoming Budget.
According to one industry insider: "We are facing a situation where the contracting base will
disappear or move overseas. In particular there will be a dramatic impact on Scottish jobs and the
Scottish economy." An estimated 380,000 jobs depend directly, or indirectly, on the UK oil and
gas industry, of which 126,000 are in Scotland.
City analysts expect capital investment by the newly merged BP Amoco in the UK North Sea to
fall from pounds 1bn in 1998 to about pounds 500m this year and as little as pounds 200m in
2000. Shell, its arch rival, is expected by analysts to cut its North Sea capital spending
programme to between pounds 300m and pounds 400m this year, falling to about pounds 150m
next.
According to one City expert: "The North Sea has become marginal. At this sort of oil price the
industry has not got the cash to invest and in any case the North Sea is not your first choice any
more."
The Government recently backed away from proposals to impose even heavier taxes on the
offshore industry, but many of the companies claim that does not go far enough. Some are
lobbying for the abolition of petroleum revenue tax and royalties on older fields, which are levied
in addition to corporation tax. Others want tax credits for exploration while critics say this can
encourage "irresponsible exploration plans".
Alex Salmond, the leader of the Scottish National Party, said he backed any move for short-term
relief but opposed major change to the tax system.
"The UK is the most liberal tax regime in the world. I take cuts in investment and the job
implications seriously. The one thing that is certain is that the oil price will come back up. The
only question is when."
(Copyright 1999 (c) The Telegraph plc, London)
_____via IntellX_____
Publication Date: February 28, 1999
Powered by NewsReal's IndustryWatch
...back to top |
