Report: UK Oil & Gas Industry Evaluation (2010-2020) and Analysis

This report provides an evaluation of the UK oil and gas industry over the period from 2010 to 2020, examining the changes in average crude oil prices, the economic determinants influencing these changes, and the impact of government actions. The report delves into the economic factors affecting the industry, including inflation, income, employment, technology, and interest rates. Furthermore, it assesses the effects of government policies, such as those related to carbon emissions, Brexit, and the structure of regulatory bodies. The analysis also considers the present and future effects of COVID-19 on crude oil prices and the overall market. The report aims to provide a comprehensive understanding of the challenges and developments within the UK oil and gas sector, offering insights into the interplay of internal and external factors that shape the industry's performance.

Contemporary Business
Environment

Table of Contents
INTRODUCTION................................................................................................................................3
TASK ..................................................................................................................................................3
Evaluate the UK Oil & Gas industry over the last ten years.......................................................3
1. How have average Crude Oil prices in the UK changed over the period from 2010 – 2020?3
2. What are the economic determinants of the changes outlined in your answer to Question 1?5
3. How has government action over the period 2010-2020 affected the UK market?................6
4. Present and Future effects of COVID-19 on the prices of Crude Oil....................................8
CONCLUSION..................................................................................................................................10
REFERENCES...................................................................................................................................11
Books & Journal:.......................................................................................................................11

INTRODUCTION
In business sector, market is changing with period of time. Business environment is defined
as process of combination procedure of both internal as well as external factors affecting the
organisational overall structure. UK oil and gas industry is wider and broader which produced over
1.45 billion BOE ( Barrel of Oil Equivalent) per day. This report comprises of interaction of internal
environment with external environment, market economy functions, economic environment, global
business environment & benefit and COVID 19 impact on UK Crude oil prices. They also focus on
offering fuel that helps in transportation as well as individual person around various part of globe.
They are also focuses on adopting large supply chain that helps in employment of ample of
individual person within business organisation. It will assists in enhancing contribution or efforts in
respect of economy in UK that is in terns of exports, higher improvement of technology and higher
revenue in term of tax (Barr, 2018). Moreover, the current scenario of spread virus of COVID-19
imposes direct impact on industries of globe and specifically improved nations have hit precise
tough.
TASK
Evaluate the UK Oil & Gas industry over the last ten years
Oil and Gas industry in UK has changed periodically. With its extensive and complex
supply chain, it has been able to provide its services at different locations. This industry is changing
with changing market situation & environment. In relevance with contemporary business
environment, changes in market has increased the issues for business sector. Also, it is necessary to
be aware about external as well as internal factors which affect the business at depth. By focusing
on internal & external environment, it is easy to make decisions within the business in proper
manner (Ștefănescu, 2018).
1. How have average Crude Oil prices in the UK changed over the period from 2010 – 2020?

Cruide Oil is most important natural product which is have higher demand in many
countries. The main reason is that it is used for many purposes and have wider applications such as
it is used in organic materials, hydrocarbon deposits etc. A crude oil can be used for producing
usable products like fuel, diesel, etc. From the above displayed graph, it depicts the changing
prices of crude oil from year 2010 to 2020. The baseline is showing an alternative price change
which occurs within those years (LaMaster, 2016). Also, BOE is been also shown on x axis. So, it
has been examined that it in mid of 2015,the prices of oil had been drastically decreased. This is
mainly because of change in technology, external factors like political economic, social & then
internal elements such as strength & weakness of business, threats from competitors has affected
the price of cruIde oil at deeper analysis. Moreover, with combined effect of supply-demand side
elements business has been affected a lot. As a largest producer of petroleum, they started export &
produces cruIde oil from the year 2005. By analysing the baseline which shows growth economy of
UK shows that reduction in prices of oil as well as gas industry will have deep impact on
development of country & economy. There has been a drastically changes & revolution of cruIde
oil between 2010 -2020. In UK, most of cruide oil is being extracted from UKCS (The North Sea
Continental Shelf) (Haque,2020). Over the half decade, oil & gas production is declining at annual
average rate of 6 %. Country does both import & export of cruide oil.
This is essential for oil & gas industry to focus on prices of oil because low prices leads to
less benefit from business activities such as airline industries. Higher prices will leads to growth as
well as development at larger extent. Thus, it is necessary for them to analyse changes over stated
period so that future analysis is determined in correct way.

2. What are the economic determinants of the changes outlined in your answer to Question 1?
From the above discussed question, it is seen that increase or decrease of oil & gas
industry directly affects the economic growth & development at depth. In context of UK, country's
economic plays crucial role in accomplishing goals. It is crucial for every enterprise to implement
effective strategies to stabilise the economy of country. By analysing economic determinants, it is
easy to examine the question 1. This will leads to accessing of factors creating a impact on cruide
oil. It is also important to be aware about them so that decisions making related to field is being
analysed. In relevance with oil & gas industry, they have been always affected by such factors or
determinants (Moosa, 2020). There are many economic factors which affects the changes which are
discussed below-
Economic determinants-
Inflation & deflation rate- This is firs most essential factors which affects the price of oil
& gas industry in UK. This is because both oil & inflation are inter-linked with each other. For
example- oil is used for heating homes, transportation etc. They both affects the economy because
for example if prices of oil gets decreased then use of plastic will be more & it will somehow have
impact on consumers which leads to inflation. These both rates impacts the change which is related
to country's growth as well as development (Nonejad, 2020).
Income- This is another factor which affects changes & economy of a country. Income of
a individual in country play important role in development of economy. This also have a impact on
prices of cruide oil. Rationale is that larger the income will be of a person, more consumption of oil
will be there in market. Therefore, it directly affects growth economy of a country. The disposable
level of income reflects the growth of a country & industrial sector.
Employment- It is one of the major element because employment is crucial for
development of business & industrial sector. At the time of recession, employment assist in
increasing of work stability, provide benefit to government agencies etc. It have definite impact on
economy & price on cruide as well. For example- if more employed people are present they will
use more oil or gas related products which increases the stability of economy. Therefore, it is
necessary to be active so that everything is carried out properly.
Technology- With changing period of time, technology has increased its usage all over the
country. With rise of this competitive era, everyone has become techno savvy & are well aware
about drawbacks as well as benefits of same according to which they use. In Europe, the field of
technology is enlarging with new cope & ideas. People are becoming addicted to technology and
cannot live without it. With increase use of this, hybrid vehicles electric cars are being manufacture

& distributed all over UK. It significantly affects price of cruide oil. For example- in many
companies which uses advanced technology require oil for running.
Interest rates- It is another determinants which affects prices of cruide oil as interest rates
are flexible in nature & have impact in prices of oil. This is because United Kingdom have higher
interest rates at moderate level which affects the price of oil. So, this determinant is necessary to be
analysed so that everything is being done in proper manner (Barrows, 2020). Moreover, it affects
the country's economy as rise or decrease of inflation rate leads to change in decision making. This
increase & decrease of rates have make it complex for industry to react to the situation or uncertain
events.
After analysing the above matter, it is seen that economic determinants of the changes are
needed to be understood in correct way. This will assist in carrying out the decisions properly. By
accessing these elements it possible to improve the changes in positive manner. These factors are
changeable & do not have a fixed situations. Furthermore, prices of cruide oil is also getting
impacted by these factors at depth. Therefore, to properly access these elements market research is
required so for effectively analysing these impacts.
3. How has government action over the period 2010-2020 affected the UK market?
As the prices of cruide oil has been changed from period 2010-2020, government have
taken many steps regarding changed prices as well as impact on their oil and gas industry. In
context of OGUK, Oil and Gas UK association which is government body of the industry has said
that country is being struggling for growth in O & G industry because of shifting from fossil fuel to
carbon emission. OGUK have also declared that at prices of $40 a barrel and 25 pence a therm for
natural gas expected producers to effectively for cash neutral (Liu, 2020). Producers world-wide
have cut spending and dividends following a price crash that has seen benchmark oil futures on
track for their worst quarterly fall since the 1980s.
Impact on market
 Slow Approach of OGUK- This states that in reference with OGUK, they have taken
strategies but with slow growth and actual implementation. This has affected the growth
scale of market and also created a negative impact on oil as well as gas industry. In present
situation, it is difficult for UK market to develop the applications or attract investors for
business operations (Bassi, 2016). This also affected the workforce or say employment at
deeper scale.
 Focussed on carbon emission rather than oil or gas- Another government action which
was taken & affected the market was that companies started focusing more on carbon

emission. This shift creates a huge impact on many firms located in country. Moreover
through, this middle firms were unable to cope up with market trends. This leads to conflicts
between market intermediaries at higher scale.
 Brexit- It is one of the most caused actions which have disrupted business environment at
depth. With change of policies & procedures, it have created a huge effect on market sector
which has leads to slow growth of sectors. The UK oil and gas industry faces bad experience
difficulties in accessing skilled workers as 5% of the total oil and gas workforce and 7% of
the offshore workforce come from EU countries (Wang, 2020). Due to impose of Brexit, it
has created deep impact on workforce of market. Moreover, people find it difficult to get the
job because of these policies. Furthermore, with implication of no Brexit deal this has
created a large impact on tariff as well as non-tariff taxes.
 Splitting of government bodies- This is another action in which different regulatory bodies
were responsible for managing supply or strategy of oil or gas industry. As the market
changes, it makes it difficult for market sector to focus adopt which bodies policies or
procedures. But with current present view, it is seen that all the bodies will be put together &
will be working with new strategies and tactics which will help in development of stated
industry sector (Hearson, 2018).
The stated paragraph shows that government actions have resulted in deep effect of market
area between the interval. Due to fluctuation in this industry, it has impacted overall country in
widely manner.
There are various actions which is taken by government of UK such as increasing economic
manufacturing around the UK offshore in relation to oil as well as gas resources. In addition to this,
the government also focus on improving and retaining of supply chain growth in UK industry and
also in both global as well as domestic market. And they also emphasised on collaboration around
different sector and also among government and different industry.
The primal tactics is to keep sector as well as government to increase recovery of oil that
provide support the changing supply chain that results in retaining higher quality employment at
UK. The government of UK focuses on conducting work hat helps in managing clear understanding
and stability in fiscal government in order to increase growth in future period of time.
The government focuses on offering leadership support which is needed for providing
energy as well as increasing prosperity goal or objectives. The execution of innovative technology
is supported through government that is considered as a significant for increasing recovery from
external environment in an appropriate manner. The R and D department of government of UK
focuses on increasing willingness to increase investment amount in various sector at UK that is
determined as approx 0.3 % sales in future period of time. The UK is gaining benefits from different

sources related to supply of gas. It is determined as a most liquid market of gas ans a large import of
needed infrastructure as well as transportation facilities.
Petroleum act 1998: It is considered as an act which is given by government in relation to
right of gas as well as oil resources at UK and in England. This act provide license so that there is
an right which is related to different search. The government focuses on setting license application
that must be in term of fixed location at UK. This methods focuses on recovery of limited or
restricted resources related to petroleum.
Tax regime: It is considered as a regime that provide support to economic recovery of
different kinds of resources in relation to hydrocarbon at UK. This must be applied to gas as well as
oil extraction activities and function that includes three kinds of taxes such as Rign Febce
corporation tax (RFCT), Petroleum Revenue Tax (PRT), Supplementary charge (SC) (Ifelebuegu,
2017). The government of UK is higher committed in respect of taxation reform in order to
increase investment process at UK as well as maintain oil sector of UK in highly competitive globe.
OGA Levy: It is considered as a government owned industry this is not focusing on
increasing profit margin of organisation. Therefore, the government provide finance in order to
perform different activities and functions in an appropriate manner. The levy on license is
considered as a OGA levied in which production (89%) & pre production (11%) for license
holders, it was launched with influence from year 2015 (Słowakiewicz, 2020). Therefore, it has
been analysed on income or revenue which is shown in term of annual accounts.
4. Present and Future effects of COVID-19 on the prices of Crude Oil
The inflation has reduced since a time period of few months as there has been enhancement
of prices that is leading to slashing of motor fuel prices. The consumer price index has slowed down
by 1.5 percent since February to 1.7 percent accordance to the reports of national statistics. There
has been lock down since march 2020 because of the spread of COVID-19 virus. The biggest
downfall in the crude oil prices has been because of the limitation on trade activities that used to
take place across borders between countries. There is no adequate capacity to deal with the
prevailing situation of recession and it is affecting the future possibilities of lowering down of trade.
In April there has been high suffering across world especially in UK as non essential business have
been completely slowed down. The prices of fuel and lubricants have resulted into a big downfall
that was approximately 16.7 percent (Barr, 2018).
There is drastic fall in the demand of crude oil prices that has leading to a big crisis. UK has been
one of largest producers of Oil since year 2019 there is sustaining of the decrease in process by high
amount of investment. But the lower demands this years has resulted into complete downfall and

there is requirement of time period three to four years to recover from these losses. According to
different media reports lock down in countries like south Africa, UK has resulted into restriction on
travelling that is leading to a complete restriction on fuel usage and that has impacted the complete
decrease in demand graph of oil.
The international demand or need of oil will shrivel because there is approx 15-20 million
large indefinite amount per day so that corona imposes direct impact on oil intense economies.
Therefore, it has been analysed that consumption of oil in UK will lower down to 12.5 mbpd. And
also there is a reduction of approx 8 % in consuming oil in global areas. Therefore, it is important
to meet the need or requirement of different countries such as Indonesia, France, Thailand. Mexico
as well as UK and many more. Hence, there are approx 22 economies which consumes 78 % of oil
under condition of COVID-19 (Ștefănescu, 2018). The crude oil costs in will be lower down at the
cost which is considered as a 17 years lowered down. The reduction in cost of crude oil has
generated a kind of distress between investors in prevailing industry. For example service provider
of oil Schlumberger has introduced the cutting by 30% in capital expenses. It has been analysed
that the oil and crude industry will required some extra support from government in future period of
time to provide support to operations and functions in an appropriate way. The country focuses on
importing oil will generate alternative methods to create income from any kind of alternative
mechanism (LaMaster, 2016).

CONCLUSION
On the basis of above mentioned report, it has been analysed that oil and crude industry of
UK is going to be changed quickly. Therefore oil and gas industry of UK focuses on providing
energy to different power sector as well as heat homes. They also focus on offering fuel that helps
in transportation as well as individual person around various part of globe. They are also focuses on
adopting large supply chain that helps in employment of ample of individual person within business
organisation. It will assists in enhancing contribution or efforts in respect of economy in UK that is
in terns of exports, higher improvement of technology and higher revenue in term of tax. From last
10 yeas, there are different kind of changes which take place in this sector that provide bright future
of oil industry in UK. In addition to this, the government take many decision and action that must
be connected to particular aspect. Moreover, the current scenario of spread virus of COVID-19
imposes direct impact on industries of globe and specifically improved nations have hit precise
tough.

REFERENCES
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