Oil & Gas UK’s latest business confidence index published today (17 November) clearly shows that the confidence of the oil and gas industry remains cautious having shifted little over the past two quarters, dropping one point from 54 to 53.

The index measures a number of economic indicators, including changes in business confidence, activity levels, business revenue, investment and employment. It gauges overall industry confidence on a 100 point scale, with a higher rating (above 50) indicating a positive outlook and a lower rating (below 50) representing a more negative viewpoint.

Ken Cruickshank, Oil & Gas UK’s supply chain manager, said: “When we look more closely at the figures it is clear that there are only minor fluctuations in confidence levels, above and below 50 right  across the industry. Overall, it is worth pointing out that the industry is only just in positive territory and that the mood is less optimistic than this time last year when the industry registered 57 points.

“Operators generally appear more cautious than the contractors, suggesting that they are taking time to assess the full implications of the tax changes and the medium and long term impact on future projects.

“The contractor sector tends to work within a more immediate timescale and has sustained a slightly more positive outlook in the mid 50s. This would suggest that the sector is continuing to win work from UK oil and gas developments where investment is already committed, or where the economics are sufficiently robust for these projects to go ahead.”

Mr Cruickshank concluded: “Even with the recent high oil price, concern about the province’s long term future has resulted in the index remaining in only marginally positive territory. In order to restore industry confidence and maximise economic recovery of the UK’s oil and gas resource, incentives for investment will be required. Having a predictable tax regime has an important role here and we look forward to an early and positive conclusion to the discussions taking place between the industry and the Treasury.”

The key findings for the third quarter of 2011 are:

• Overall the Oil & Gas UK Index measured 53, a drop of one point from 54 in Q2
• The operators’ outlook increased by one point from 48 to 49. The major operators’ index dropped from 52 to 51 while the independents’ index rose by one point from 47 to 48
• Across  the contractor community confidence dropped one point from 56 to 55 with all four sub-sectors remaining within the 50s range:
- drilling and well services increased from 54 to 57
- facilities engineering, operations and maintenance fell by one point from 56 to 55
- marine and subsea recorded an 11 point drop from 64 to 53 (although this has to be seen within the context of a different sample size from those recorded when the survey was first launched in 2009)
- support services increased by three points from 54 to 57

The full survey can be found at http://www.oilandgasuk.co.uk/cmsfiles/modules/publications/pdfs/OP063.pdf

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For further information, please contact Lucy Gordon on 01224 577331.

Notes to Editors

1. Oil & Gas UK is the leading representative organisation for the UK offshore oil and gas industry. Its members, who number over 180, are companies licensed by the Government to explore for and produce oil and gas in UK waters and those who form any part of the industry’s supply chain.

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