For some time the Offshore Industry has recognised the need to change the way it conducts its business if it is to retain a viable economic position in the future.

I presented a paper almost three years ago in Aberdeen that considered the issue of Improving the Competitiveness of the UKCS Offshore Industry. I believe this conference is an ideal opportunity to review what has been achieved since then and what further action is needed if any, with specific regard to the issue of Alliance and Partnership Relationships.

Industry Challenges

I summarised the huge challenges that the offshore industry faced then as follows:

New Development Undeveloped fields on the UKCS are more marginal in economic terms and will not be viable if their development is tied to traditional means because since the early 1980s, offshore costs have doubled while the oil price has about halved.

Producing Fields The revenue generated by the majority of these is in decline. In addition the effort to maintain existing platforms is increasing as the installations age, and added expenditure is necessary to accommodate the changes demanded by the new safety regime in the UK.

Competition The industry is operating on a global basis, and other areas of the world hold economic attractions for the operators, particularly for new developments. While the UK's political stability and advanced offshore infrastructure are attractive features, lower pricing can be found elsewhere.

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