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Turning the tide

The transformation of the North Sea

PwC and Oil & Gas UK (OGUK)

There is a changing of the guard underway in the North Sea. Every few years people talk about the imminent demise of the basin but the UK Continental Shelf (UKCS) is a resilient place. Cost discipline combined with innovation is helping companies to navigate the economic turbulence the region has faced in recent years.

Three years on from our groundbreaking report ‘Sea Change – the Future of North Sea Oil & Gas’, PwC and OGUK have collaborated to bring you a current perspective, based on interviews with over 20 senior stakeholders from the industry.

The key questions our report addresses:

  1. What are the growth strategies that will allow operators and oil services to grow their businesses sustainably in a dynamic and evolving market?
  2. What are the core capabilities market players need to develop to be successful and how do they acquire these capabilities? Is it through acquisitions or partnerships?
  3. How should oil and gas companies position themselves to flourish in a world where we are rapidly transitioning to a lower carbon society?

These are fundamental questions to pose and some might argue even existential. For nearly 50 years, oil and gas from the North Sea has shaped the UK’s economic prosperity. We are now witnessing the dawn of a new low carbon era where the North Sea has the potential to shape the energy transition and underpin the nation’s ongoing prosperity.

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Turning the Tide - the transformation of the North Sea

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The UK Continental Shelf (UKCS) has emerged from a challenging downturn

Three years ago, the industry was in intensive care. Investment has collapsed. Drilling activity was on the decline and exploration activity was at an all-time low. Downsizing and job cuts were the order of the day and few expected the UKCS to regain its competitive form.


Production is up
Oil and gas production is up by 20% over the last four years, rising from 1.4 million barrels of oil equivalent per day (boe/d) to 1.7m boe/d in 2018.


Production efficiency
Production efficiency is at its highest for a decade and unit production costs have halved to US$15-16/boe.


Increased investment
After three bleak years, the industry sanctioned £3.3 billion of investment in the UKCS in 2018 and there is a rich diversity of companies investing in field developments. 

Key themes


  • There is recognition from operators that the supply chain has endured hardship in recent times
  • The industry needs to focus more on value creation and less on cost
  • New partnership models between operators and supply chain will improve collaboration and operational effectiveness
  • Innovation will be key in building new business models (centralisation, clustering)
  • The introduction of more agile ways of working and digitalisation & data analytics will change how the industry operates


  • PE, Independents and OFS are the critical players for the immediate future of the basin
  • What happens next for PE over medium term will be an interesting development
  • We could see the potential rise of private capital from developing economies

Energy Transition

  • Investor sentiment is evolving and there are rising concerns around commodity price volatility and sustainability
  • Independent oil & gas companies are likely to face increased ESG scrutiny
  • A new narrative for UKCS is required vis-à-vis energy transition and the basin's role in making it happen
  • The UKCS could become show case for transition by supporting CCUS, utilising existing technological expertise to help offshore wind and the potential for hydrogen production

"As an industry we have to continue to find ways to develop oil and gas safer, cheaper, faster and with a smaller carbon footprint. But if ever there was a region renowned for its ability to drive positive change, it’s the North Sea."

Ariel FloresNorth Sea Regional President of BP

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Drew Stevenson

Drew Stevenson

Leader of Industry for Energy, Utilities and Resources, PwC United Kingdom

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