Fears that the UK oil industry is close to collapse are “over the top” but the sector is facing a “very difficult year”, a leading expert has warned.
Sir Ian Wood, founder of the Wood Group and a UK Cabinet adviser, said the industry has “significant momentum from major investments made over the last two or three years”.
He dismissed claims by Robin Allan, chairman of the independent explorers’ association Brindex, that the industry is “close to collapse”.
Forecasters Oxford Economics said “oil prices are likely to be lower over the longer-term than forecast three months ago” due to weak demand from China and strong production from the US.
But it expects oil prices to rise to $111 (£71) a barrel by 2020 and $200 (£128) a barrel by 2040.
Sir Ian said: “Comments yesterday that the UK offshore oil and gas industry was ‘close to collapse’ are over the top for an industry which thinks and plans long-term, has significant momentum from current production and from major investments made over the last two or three years, and where the operators make their investment decisions based on the anticipated price of oil in two to three years’ time.
“It’s important to have a balanced perspective at this time.
“The UKCS (UK Continental Shelf) does face a very difficult year to 18 months which will see a slowdown in investment, the loss of some offshore production, up to 10 per cent, and the possible loss of around 15,000 jobs within an industry which employs 375,000, although this is difficult to estimate.
“It will be a tough time for the industry and the people that work in it, but we are entering a downturn from which we will recover.”