What oil price would Scotland have needed to balance its budgets if people there had voted yes?

http://www.bbc.co.uk/news/business-30707638

with all the secret oil fields we were told about before the referendum I imagine there is so much of the stuff we don’t need to worry about price, oh hang on…

None because Scotland wouldn’t be independent yet.

STW Scottish Indy Bingo Card ready…

– deceitful one
– book of dreams
– SNP compared with UKIP
– jocks
– thm, jy and bc all post on first page

ID read somewhere that SNP needed c.$100 a barrel to fund plans, and even upto a few weeks ago N Sturgeon was quoting OPEC forecasts of $100+ for next year in defence of policy funding, despite forward spots being <$70 for every month in 2015.

More than 50 thats for sure.

I have a friend in Aberdeen who is an offshore engineer. People are taking big paycuts, contracts are not being renewed, some loosing their jobs already.
He reckons if it continues the place will become a ghost town in two years.

Not sure I can see that happening myself but its going to change the economy of that area for sure.

my contact described it as a bloodbath…

I guess it depends on which line of work you are in, anyone in new projects isn’t going to have a nice time for a while. But other areas will continue albeit in a trimmed form, such as operations, process, integrity & FM.

Scottish oil

ahh so it is Scottish oil then.

Ha ha ha

I doubt Aberdeen will turn into a ghost town so quickly, but a continued oil price will have an effect on the local economy.

I am one of many who has been a casualty so far and there will be more to come I’m sure.

Unfortunately production rates have declined whilst costs to exploit have gone up. The post 2009 oil prices have perhaps served to disguise some fundamental issues. That said nearly every ‘reputable’ source of price forecasts were until very recently forecasting at prices much, much higher than they have dropped to.

The UK government does need to support the industry through fiscal stimulus, but also if there is no profit made it cannot be taxed even at a reduced rate.

The issue with Aberdeen is that the economy is so currently dependent upon the oil and gas industry that it does run the risk of becoming another post industry type (think steel, coal, fishing, car- making, ship-building, etc) disaster zone unless alternative industries are developed.

That said, the costs of abandonment are so prohibitive plenty operators will continue to operate – often at a loss – until forced into abandonment. Decommissioning and abandonment will be an industry itself, with skill-sets similar to those used in the exploitation phase, so when this phase gets going the UK government will certainly note the reduction in tax revenues – which do support the UK as a whole.

Also remember that the oil industry supply chain is much, much wider than Aberdeen so a downturn will have a broader impact geographically.

He reckons if it continues the place will become a ghost town in two years.

Somebody needs to do something about the atrocious traffic 😉

The UK government does need to support the industry through fiscal stimulus, but also if there is no profit made it cannot be taxed even at a reduced rate.

Agreed that the government has a role to play as a reduction in taxes in the short term, could pay dividends in the long term.

Out of interest what areas are being hit with job loses, as so far I don’t know anyone who has lost their job, not to say that won’t happen later in the year mind.

http://www.bbc.co.uk/news/business-30525539

With many fracking areas due to be opened up in the near future, off shore will die due to the huge infrastructure and employment costs incured, tough on the people who are loosing their jobs, and all the businesses that are going to be afected.

that quote from Premier doesn’t reflect the industry as a whole ^^

Ok, I worked for a US super. Contractors and staff across all disciplines lost their jobs. This is not or won’t be unusual…

He reckons if it continues the place will become a ghost town in two years.

Those poor BTL landlords with no tenants 😥

I work for a service provider and we saw all our contractors and aging staff disappear before Christmas. We expect to see 10-15% of the workforce to leave this month building to around 25% by the end of the quarter… It is not a fun place to be at the moment.

You might joke about the BTL landlords but it probably rings true once all the ancillary services (Laundry, cleaners, transport, offshore catering, dock workers) start getting cut too. Not to mention when people have no money they won’t be going out to pubs and restaurants so those business will suffer too…

Add to this defaults from overstretched business (maybe outside of the UK) on their loans and decreased performance of pension funds as there are smaller profits everything is looking wonderful! Not to worry though we will all be able to buy cheap petrol and drive to the non-existent job interviews…
🙁

Aberdeen has always been a shithole. It will revert to type eventually. Much like a lot of the middle eastern super-cities.

Of course premier would say that , premier are heavily vested in exploration of difiicult to retrieve deposits, stuff that isnt economical to retrieve atm…..

So of course it looks bleek for em.

“None because Scotland wouldn’t be independent yet.”

Is that right …. and now the maths wouldnt come close to adding up would there be tails between legs….. …

zigzag69 – Member
STW Scottish Indy Bingo Card ready…

– deceitful one
– book of dreams
– SNP compared with UKIP
– jocks

Sorry to disappoint but we have moved on now – a resilience fund not a wealth fund – the latest nugget!

But just to keep you happy

– thm, jy and bc all post on first page

Bingo!

Not just impacting Aberdeen; my son’s been laid off, his firm produce chemicals that help separate gas from oil (used in the pipelines) – at current prices it’s not worth recovering the gas…

What a lot of people are also forgetting is that a large % of the companies in Aberdeen don’t do the majority of their business in the UK it’s in other basins where it’s still economical to get the oil out at these prices just now.

The ones to suffer in the short term will be the E&P companies – see the story from the other day where Talisman Sinopec paid $34m to cancel a rig contract with Archer they had booked for 2016 that was going to cost them $96m. Better to take the hit now and pick the rig up later on when the day rates drop due to rigs being stacked as there’s no work.

The doom & gloom just now is nothing compared to what it will be like at the back end of the year and in to 2016 when the rest of the supply chain really start to see the effects of a prolonged low oil price. Look at the last time in 2009 although it was only about 6 months some of the E&P companies suffered initially but you didn’t see the effect on the rest of the chain until 2010.

Expect to see a few mergers or big defaults from some of the independent E&P companies and the others who are closely tied to them who have loaded up on debt when the oil price has been high!

Is that right …. and now the maths wouldnt come close to adding up would there be tails between legs….. …

Yes, it is right.

He reckons if it continues the place will become a ghost town in two years.

Expect a huge glut of BMW X5’s and Audi S Lines (white, natch) to flood the market over the next year or so…

Breadmaker, not S Line Audis, try RS and S models as that’s what the majority of people drive in Aberdeen alongside X5’s and Porsche’s

None of those on my drive, not everyone is working in O&G

No I’m the same, just made me think of a comment a colleague from Edinburgh made to me in the office today about the number of fancy motors in town.

I’m offshore just now; not in fear of my job but it is worrying, a fair few friends I have at Baker where I used to work were already scared of being canned when they were bought out last year and are worried even more now.

Think the cost of producing a barrel of oil for many rigs is still under the value of a barrel enough to make production viable, but some of the older rigs or furthest from shore rig with higher costs will be close to losing money now (some probably already are).

Almost feel it’s a good thing, cost of living in Aberdeen has been massively over-inflated for years now and it’d be good to see house prices drop into reasonable territory. Saw a thing on my fb recently showing 2 identical Barret houses, one in the central belt and another near Aberdeen – Aberdeen one cost 300k more :/ I would have left Aberdeen but my partner’s career is based here (not in oil) and she’s keen to say due to family.

Think a low oil price for a couple of years would really shake the town up, more cuts the longer the oil value low. Don’t know if it would be as bad as the oil crash in the late 80s/early 90s, but my partner told me in the past that led to lots of her friends moving house after their parents were made redundant and couldn’t afford big houses anymore.

Thats mental , how ever you can see a 100k difference in house prices just by crossing town…..

Identical bancon homes – 1 in bod one on the reclimed land on pittengullies brae culter, the culter one is 100k more…..

Nae white audis here , old paid for french motors for me.- one of them is white though 😉

Any Ducatis coming up for sale?

Love the fact the OP is using this as a dig at Indy voters. You do realise that the uk is still as one and the drop in oil price will also screw the Westminster govt and it’s projected income etc.

This is being reflected around the world the huge mining expansion in oz seems to have crashed oil shale in Canada has suddenly become unprofitable again. Fracking in uk was more trouble than worth it last year this year even more so.

benz –

The UK government does need to support the industry through fiscal stimulus, but also if there is no profit made it cannot be taxed even at a reduced rate.

Like it so successfully prevented the steel, coal, and ship building industries in the UK from collapsing??

The world is a capitalist economy, you can’t change that, better to spend the money helping people invest in new areas of growth, like re-newable energy etc that pour it down the drail on a long term lost cause…….

Ok max fair point but look at it from this point of view…

Let’s assume oil stays under $50 for the next 2-3 years as some forecasters are predicting just now.

The rigs currently operating in the N.Sea are most probably close to losing money just now but what happens if this continues for the next 2-3 years without the UK government taking action (reduced taxes or incentives to the industry)? The companies will ultimately go to the wall and the rigs stop producing. The UK government (ultimately tax payers like you and me) will then be left with the bill to decommission these rigs plus infrastructure that’s out under the sea to tune of something like $40bn+ (it’ll probably be considerably higher as it’ll become government contracts and we know how well the costs on those are normally managed) with no way of recouping this money due to the fact that there is no industry in the N.Sea generating income for the Treasury.

I find it a bit difficult to sympathise with people who have made a lot of money working in the oild industry losing jobs.
You knew it was a finite supply with prices set about as artificially as diamonds didn’t you?
Downsize time kiddies. Same for all those who piggy backed off their gains. Obviously you saved against this day…

Breadmaker, not S Line Audis, try RS and S models as that’s what the majority of people drive in Aberdeen alongside X5’s and Porsche’s

So it’s like Hampstead/Richmond/dulwich/Mayfair/Notting hill where everyone is a millionaire? Wow! I thought it was all neds on the Buckie up there.

It is absolutely terrible…..

I was going to get another 911 Turbo S thus year as the one I have will be a year old in a few months and getting to 10k miles…..cannot have that in the drive of the house, even with my personalised plate disguising how old it is. PEN 15 if you must know.

The wife was also saying her Cayenne Turbo S needs changed as the colour is now so last year. Not good when she is going to the dentist to continue her enhanced white smile treatment – folks will surely notice our poverty. However the teeth do match the car so hopefully she won’t need these re-done to match a new one. B16 FUD for her reg.

No, none of the above is true….well, I did suggest the reg plate for my wife’s car, but she declined.

Seriously, is there any other industry which is so heavily taxed on any profits?

With some of the recent tax changes (exclude the recent 2% ‘reduction’) it would not surprise me if PRT and supplementary charge went up to compensate for the reduced tax revenue at current pricing…

I find it a bit difficult to sympathise with people who have made a lot of money working in the oild industry losing jobs.

Not everyone earns the big bucks, I’m not an engineer and don’t work offshore so I earn a pretty miserable sum compared to many of my colleagues 🙁

PEN 15 if you must know.

Steve Parish is here! Tell us about how you raced with Barry.

bigjim – Member
I find it a bit difficult to sympathise with people who have made a lot of money working in the oild industry losing jobs.
Not everyone earns the big bucks, I’m not an engineer and don’t work offshore so I earn a pretty miserable sum compared to many of my colleagues

The people hardest hit will be the contractors in the supply chain, these guys do not earn the big money and will be the first to take the hit when contracts stall or are shelved.

The oil and gas industry lives very much in a bubble, especially in Aberdeen. Times have been good for a few years, but a couple of lean years might be on the cards. But remember the platforms whether producing or not are still pretty much fully manned currently. Routine and maintenance work still carries on.

It will take a while for the cracks to show but if oil stays low for more than a year then yep a lot of people, myself included will be out of work.