The stark warning comes as companies in the sector report an increasingly grim outlook as they deal with the fallout from the coronavirus pandemic and a 20-year low in oil prices and a 14-year low for gas.

The industry is expected to see a dramatic reduction in revenue, sparking concerns about the ability of some companies to survive a downturn that is likely to be even more severe than the one in 2015 which the sector is just emerging from.

The figures are published in a report issued today by OGUK following a survey of its membership.

The Business Outlook: Activity and Supply Chain report calls for urgent action to protect energy security, jobs, and energy regions.

OGUK has also asked governments and regulators to support a three-stage framework to support the sector in dealing with the immediate crisis while positioning it to play a key role in the UK’s transition to a net-zero future.

The report highlights that the average oil price for March was $22.5/barrel, a 65% decrease compared to January 2020. This trend has continued in April with Brent price falling to its’ lowest point for 20 years to $16/bbl on April 22nd.

Last week, Scottish Financial News reported that Brent oil fell by 25% after US crude oil plummeted to hit a negative value for the first time in history.

There is now a stark contrast in sentiment compared to the beginning of the year with all E&P companies and 93% of supply chain firms reporting a worse or significantly worse outlook for 2020.

Although there is still a significant degree of uncertainty in estimates affecting the next 12-18 months, based on company feedback, OGUK currently anticipates that the level of direct and indirect jobs supported by the industry could contract by up to 30,000 during this period.

The survey feedback also indicates that as part of their response to the crisis more than three-quarters of supply chain companies plan to increase their non-oil and gas work this year.

Around 30% of respondents to the recent business survey identified that they were successful in securing funding through government COVID-19 financial packages, with over 40% sounding out the different options as this report went to release.

The three-stage framework proposed by OGUK covers: immediate needs, industry recovery and accelerating to a net-zero future. It includes recommendations to improve current COVID-19 financial packages, retaining a sector leading and progressive regulatory, fiscal and policy framework, as well as the development of a sector deal which will support the supply chain and accelerate the UK towards a net-zero future.

Deirdre Michie, OGUK chief executive, said: “With historic low oil and gas prices coming so soon after one of the most severe downturns our sector has experienced, these findings confirm an especially bleak outlook for the UK’s oil and gas industry. If the UK is to maintain its supply of domestic energy, protect jobs and build the critical infrastructure it needs to transition to a net-zero future, ours is an industry worth fighting for.

“It’s why OGUK is today outlining a three-stage framework with a range of measures for governments and regulators to support industry now, stimulate a recovery and accelerate the transition to a net-zero future.”

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