OIL & Gas UK has said the North Sea supply chain is likely to remain under intense pressure for months as it called for more help from the Government to protect jobs in the area.
The industry body underlined the scale of the challenge facing firms as the oil price rout takes a heavy toll on revenues.
Momentous Opec Plus production deal may not lighten gloom in North Sea
The price fall was triggered by the slump in demand caused by the coronavirus. This has also required firms to scale back North Sea operations on safety grounds.
Oil & Gas UK supply chain director Matt Abraham said the effects of associated cuts in spending will hammer firms across the sector.
“For the rest of this year nearly all of the supply chain will be suffering extensively,” he told journalists.
“It’s tough times all round and nobody is seeing it getting better any time soon.”
While major exporters agreed at the weekend to make record cuts in production to support the market experts have warned the crude price could remain in the doldrums for a long time. The scale of the economic dislocation caused by the coronavirus is unprecedented.
Experts warn: Oil price plunge will mean end for range of North Sea fields
Mr Abraham signalled Oil & Gas UK expects conditions to remain very tough until well into next year.
It wants the Government to extend the furlough scheme under which it will help cover the wages of employees placed on temporary leave due to coronavirus-related issues.
The scheme is due to run until the end of May. Oil & Gas UK wants it to run for a further nine to 12 months.
It is also seeking confirmation that the scheme can be drawn on by firms that put employees on furlough as a result of trading issues related to the crude price fall.
Separately North Sea-focused Cluff Natural Resources said the oil price fall could help it to make faster progress.
North Sea exploration deal coup for oil and gas pioneer Cluff
“The current downturn may present the Company with an opportunity to commit to drilling its wells at a time of relatively low cost, including advantageous rig rates,” said chief executive Graham Swindells.
He noted that the company entered the downturn in a strong position. It had £13m cash at March 31 and no debt.
The company achieved a coup last year when Royal Dutch Shell agreed to buy in to two of its licences. It said it is working with Shell to mature prospects on the licences towards drilling activity.
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