The latest Decommissioning Insight 2016 report has been published by trade organisation Oil & Gas UK, predicting that the offshore oil and gas decommissioning sector in both the UK and Norway will see a gradual but steady increase over the next ten years.
This is the first survey to be carried out of decommissioning markets in both countries and has confirmed that the market is growing, despite it being a newly emerging sector – and despite low oil prices, which are still challenging the more mature offshore assets in the North Sea.
Mike Tholen, the group’s upstream policy director, commented: “The UK’s supply chain will need to focus on developing a high-quality, cost-efficient and competitive decommissioning capacity to make the most of the opportunity and provide a range of goods and services that can not only be deployed in the UK but also exported overseas.”
Last year, total decommissioning expenditure in both Norway and the UK reached £2.1 billion collectively, compared with the £1.6 billion or so spent during 2014. Furthermore, the total amount that is forecast to be spent on the UK Continental Shelf (UKCS) between 2016 and the year 2025 is £17.6 billion, up from the £16.9 billion for 2015-2024.
In addition, the organisation’s Economic Report 2016 – released back in September – indicated that in the last year and a half, the cost of extracting a barrel of gas or oil from the UKCS has been slashed to nearly half its cost since 2014, while a ten per cent rise in production was also registered.
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