Is The UK Oil and Gas Sector In Trouble?
The world’s supply of oil and gas has been hit hard in the past decade, but no other nation has felt the effects of this shortage more than the UK.
The UK’s gas and oil reserves, both existing and potential, have dropped more than 40%, from 9.2bnboe to 5.25bnboe, in the past two years, according to Oil and Gas UK.
Although 11bnboe have been discovered since 2008 (an increase of 15%), an investment of 60 billion Pounds is required to begin these projects. This project, if it goes through, can supply the UK with enough gas and oil for half of the nation’s demands.
However, the tax relief related to decommissioning these reserves have created further problems for the potential of this project. Oil and Gas UK are working with the government in order to alleviate these problems, specifically in regards to the cost of decommissioning the fields. This is the main obstacle to be overcome, and if it is not, the rate of decommissioning will surely increase in the future.
If this project is not conducted, the nation could see a loss of revenue in excess of 780 billion Pounds, according to Oil and Gas UK.
It is believed that 20% of all energy in 2020 will be reliant on oil and gas, mostly through the use of diesel fuel storage tanks. If this field is not optimized, the UK will see a large decrease in tax revenues, high tech jobs, and the import of energy reserves, which will risk the security of UK’s oil supply.
It is widely believed that an increase of 5% of the existing bnboe is needed to sustain the nation, which translates to approximately 5 billion Pounds yearly, up from 4 billion Pounds in 2008. This level of investment is mandatory yearly until 2020. Without a new project, the fate of UK’s oil and gas supply is in great danger.
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