Energy and resources in Deloitte in Scotland
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Seldom has so much happened in the space of 12 months. In the last year, we’ve witnessed a great deal of change, not only in terms of technology, politics and economics; but in many other walks of life too.
For Deloitte, it has also been a truly transformational period. Our firm has grown at its fastest pace for a decade, increasing turnover by 13.6% and breaching £3 billion across the UK Group for the first time.
The oil price drop has been severe, with a profound effect on the industry. Almost every business is reassessing how it operates and looking for ways to respond – cutting costs and discretionary capex, all the while enhancing production volumes to keep their head above water.
There are deals brewing in the North Sea. E&P companies merging and acquiring one another usually grab the headlines, and sit front of mind against the backdrop of a low oil price environment. But take a further look across the industry and we should see a notable number of transactions in the midstream sector – specifically infrastructure.
Collaboration is a buzzword in the North Sea these days. At a time when the industry is striving to restore competitiveness, improve efficiency and bring down costs it has seldom been more important. Oil and Gas UK’s most recent Activity Survey found that operating costs have dropped from around $30 per boe to $17 since 2014, but measures still need to go further.
Scratch the surface though, and you quickly realise that there’s little clarity over what collaboration actually means. That lack of understanding was one of the main drivers behind our report: Making the most of the UKCS: Collaborating for success. Surveying the UK Continental Shelf’s (UKCS) operators and supply chain companies, respondents told us that they collaborate to a high degree with their suppliers and customers in initiatives mainly aimed at cutting costs.
The festive period is a time of reflection. And looking back over the last 12 months, I can safely say 2015 was a big year for Deloitte and for me.
This will be my first Christmas as Senior Partner for Deloitte in Scotland and Northern Ireland; a role I’m honoured to hold. I’ve inherited a fantastic team, which has helped make the transition that bit easier, and I’ve been inspired by the brilliant clients the firm gets to work with every day.
The economic indicators are mostly good. Scottish corporate insolvencies continue to drop: thanks at least in part to a recent period of low interest and low inflation. UK CFOs remain relatively optimistic – although our latest survey found that uncertainty is on the rise with weakness in emerging and global equity markets.
Many businesses will have confidence; but, they need to remain wary. To paraphrase a well-used extract from Sun Tzu’s Art of War: in times of plenty, prepare for scarcity. In times of scarcity, prepare for plenty.
The North Sea has continued to make headlines over the summer; mostly for the wrong reasons. But amid the doom and gloom of media reports lamenting the terminal influence of a low oil price, there have been glimmers of good news.
Collaboration, teamwork, partnership: whether for individuals or businesses, these are often cited as integral parts of success. In fact, the father of evolution himself, Charles Darwin, said that those who learned to collaborate and improvise most effectively tend to be the ones who prevail.
In the last 12 months or so, particularly with the drop in oil price, there’s been a lot of speculation about the future of the North Sea. Strenuous efforts are being made to bring down costs, reduce complexity and make the most of the resources which remain on the United Kingdom Continental Shelf (UKCS).
During General Election fever, it was easy to forget that March saw the final Budget of the parliamentary term. But, it’s worth remembering that there were some big changes announced which continue to affect the UK - regardless of last week's outcome.