Turning the tide: the transformation of the North Sea

Abstract

As part of the Sea Change campaign, we looked at the evolution of the UK North Sea, interviewing over 20 senior stakeholders across the value chain ranging from operators, oil services and regulators, to academia, private equity and banks. We collected their views across three themes: (1) Competitiveness of the basin – Recognition that the supply chain in the basin has been exposed to enough pressure and was not sustainable going forward. New business models were required to incentivise collaboration between operators and oil services. (2) Investment in the basin – Respondents confirmed that private equity and smaller operators would continue to play a major role. However, in a post private equity world, the emergence of private capital from developing countries might proliferate in the North Sea. (3) Energy transition and impact on the basin – For investors it was increasingly challenging to justify investments in oil and gas due to commodity price volatility and growing concerns around environmental, social and governance themes. Nevertheless, the sector had a need to articulate the value it brought and the importance of hydrocarbons in facilitating the energy transition. The basin has the potential to become a ‘test laboratory’ for the energy transition – from low carbon solutions to decommissioning. All these themes are extremely relevant to the Australian upstream sector. We explore the emergence of new partnership models between operators and oil field services and how a mature basin continues to attract investment and adapt to a lower carbon world.