Small oil companies ‘to boost activity’

Small oil companies within the UK have signalled that they are likely to boost their levels of offshore activity on the back of a number of recent government incentives, spelling good news for contractors working within the energy sector.

Prior to the start of summer, ministers moved to reduce the rate of tax being levied on smaller oil fields from 50 per cent to 30 per cent in a bid to boost exploration efforts.

Combined with falling costs, most notably of those related to lifting and extraction, this move means that businesses within the sector are now starting to step up their levels of activity, with an estimated 400 million barrels of North Sea oil set to be tapped over the next few years.

Explaining the upturn in the industry, Alessandro Pozzi, an oil analyst with Edison Investment Research, told Reuters: “It’s a viable business because of the low lifting costs and the low capital expenditure.

“If they manage to maintain this 30 per cent tax rate on onshore fields as well, that will be a good thing. You will see probably even more companies doing exploration,” he added.

This follows on from the recent publication of the latest Oil and Gas Eye Index from Ernst and Young, which concluded that the outlook for UK energy companies, and therefore for contractors within this field, is becoming “more positive”.

Tags:  oil companies