COMMENTS by BP bosses yesterday provided further grounds for confidence that North Sea oil and gas activity is on an upward path following the four grim years triggered by the crude price plunge.
After BP sold off North Sea assets and slashed jobs amid the ensuing downturn, directors said the restructuring the company started in 2014 was complete.
Read more: North Sea growth on agenda for BP as oil giant doubles profits
They indicated the focus for the company has shifted to growth in the North Sea where it is now generating huge amounts of cash.
Coming days after similarly encouraging noises from Shell, some might think the omens for the North Sea look good.
However, while shareholders can expect to benefit from increased profitability at BP and Shell, supply chain participants may have less to be cheerful about.
BP said it has seen no sign of inflation returning to the sector, in which it thinks there remains lots of waste following a long drive to increase efficiency that has taken a toll on services firms.
Read more: Shell boss declares giant focused on growth in North Sea amid Brexit uncertainty
Accountancy firm EY found total revenues for UK oil services businesses slumped from £34.8 billion in 2015 to £26.9bn in 2017.
While the oil price has rallied since late 2016, EY said continued concerns regarding global economic growth, the demand for crude and the ability for OPEC and others to achieve demand/supply balance, has ensured a very strong focus on cost control and capital spend.
This has kept the pressure on services firms’ margins.
With production trends in the UK North Sea set to turn down after 2020, sector players need to maximise opportunities overseas.
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