NORTH Sea oil and gas companies should be better able to cope with the challenges posed by oil market turmoil because of lessons learned in the last downturn a senior industry figure has said.

Wood chief executive Robin Watson said it was too early to predict the impact of the sharp fall in the crude price since last Friday.

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However, moves made by companies to increase efficiency and cut production costs in recent years should stand them in good stead.

“The North Sea is one of the basins that responded very actively to the downturn in 2015 going into 2016,” noted Mr Watson.

“The lifting costs have reduced quite significantly over the last three years.”

Mr Watson said Aberdeen-based Wood has benefited from an increase in North Sea activity in recent months. The company helps firms to develop, operate and maintain production facilities.

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The increase in activity came amid the partial recovery in the crude price that followed moves by Opec members and Russia to cut production from 2016.

The curbs are set to be lifted after Saudi Arabia and Russia disagreed last week about the future of the programme.

Mr Watson said yesterday: “We’ve seen a fairly encouraging uptick in activity levels in the North Sea over the course of 2019 and we see some good activity levels going into 2020.”

The North Sea remains an important area for Wood, which made its name in the basin.

However, Mr Watson noted it only accounts for around five per cent of Wood’s revenues following moves made by the firm to reduce its reliance on oil services work.

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He said Wood is focused on supporting the energy transition and the development of sustainable infrastructure around the world, amid the drive to help tackle the threat of climate change.

The £2.2 billion acquisition of Amec Foster Wheeler in 2017 helped Wood develop big positions in markets such as environmental and infrastructure engineering.

Mr Watson highlighted the potential that Wood sees to support activity in areas such as solar energy, the development of hydrogen as an energy source and carbon capture and storage.

He reckons the enlarged business is well-placed to cope with tough times in oil and gas markets.

Asked if Wood expected to be active in oil and gas markets for the long term, Mr Watson said: “We do see oil and gas being an important component part of the primary energy mix over the next generation, generation and a half, and for as long as we are doing the right sort of business with the right risk profile for the right margin in that sector we will remain in that sector.”

Wood has big operations in US shale basins. This market has come under pressure amid oil price volatility.

Mr Watson said the group delivered earnings growth, margin improvement and strong cash generation in 2019.

Wood increased underlying earnings by five per cent, to $704 million, from $668m in 2018.

It reduced net debt to $1.4 billion from $1.5bn. Wood has raised $0.4bn in recent weeks through the sale of its nuclear engineering and industrial services businesses under Mr Watson’s plan to focus on the markets that offer the best prospects.

It proposed a final dividend of 23.9 cents, taking the total dividend to 35.3c, against 35c last time.

Wood shares closed down 3.2p at 268.6p.