Over 5,000 jobs have been lost in the UK’s North Sea oil and gas industry since late last year, according to the Oil and Gas Authority (OGA).
Oil companies in the region have been hit hard by the 55 percent drop in Brent crude prices since June last year – now sitting around $50 a barrel.
Andy Samuel, chief executive of the OGA, said in a report: “Regrettably, this has led to the loss of around 5,500 jobs since late 2014,”
Samuel said that energy companies should partner up and become more efficient to avoid a collapse in the North Sea oil and gas sector.
The OGA was created five months ago as an executive body, it is a regulator of both onshore and offshore oil and gas operations in the United Kingdom. The OGA is at the forefront of maximising the recovery of oil and gas from the UK Continental Shelf.
There are also fears of a domino effect in mature areas. As platforms and fields stop operating then terminal and pipeline costs for nearby fields in the same chain rise. In some cases, several companies share pipeline and processing costs. If one company quits an area it makes it more expensive for others operating in the same area.
“We should be in no doubt about the scale of the challenge ahead,” Samuel said.
According to the Financial Times, Samuel said that some companies have responded and are now sharing resources and data. However, he pointed out that most companies were only doing this with the organisation’s help. “We would rather that they could sort it out for themselves,” he said.
There are more than 375,000 people working in the country’s oil and gas sector. It is one of the most important sources of tax revenue for the government, making the OGA’s mission important for the well-being of the economy.
Most of the major North Sea operators, including Chevron, Shell, and ConocoPhillips have announced job cuts.