- Oil and Gas UK (OGUK) wants action from the UK government to allow businesses to access finance.
- The North Sea oil and gas sector is in a “paper thin” position with oil prices tumbling, the industry has warned.
- The supply chain in particular is at risk with cash flows already tight following the 2016 downturn.
Coronavirus and increased supply have led to a “perfect storm”, according to Oil and Gas UK (OGUK). The UK government has pledged to support all businesses during the pandemic and said it was in close contact with OGUK. The industry wants urgent engagement from ministers so that businesses can access finance.
A decision by the oil-producing cartel OPEC to increase production has pushed prices to below $30 a barrel. That means companies are beginning to row back on investments which are vital to the supply chain. It is predicted there will be more insolvencies and consolidations in the industry as a result.
OGUK chief executive Deirdre Michie said: “Businesses and industries across the UK are facing extraordinary pressures, but coming so soon after one of the worst downturns in our history, this report shows that this sector is now in a paper-thin position.
“The offshore oil and gas sector is part of the UK’s critical infrastructure, providing the secure and affordable energy the country needs and is a key contributor to the economy in terms of supporting hundreds of thousands of skilled jobs, businesses and our wider economic contribution.”
The industry has called for action to ensure the sector does not lose the “skills, experience and infrastructure” it needs.
A UK government spokeswoman said: “The government has announced an unprecedented financial package to support businesses and has committed to do whatever it takes to get our nation through the impacts of this coronavirus pandemic.
“We are in close contact with Oil and Gas UK and industry, as well as other companies across all sectors during this time.”