Strategic Management of Uk Oil and Gas Industry

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The oil and gas industry is a large Industry and contributes a critical role in driving the global economy (Sam’s et. al., 2006).The upstream section of the Industry is involved with the first stage of exploration and production, the midstream section involves the transportation of crude through pipelines, ships e.t.c to the refineries. The downstream is involved with refining and process of the oil and gas products. The distribution and marketing of crude is then done for end user consumption. For purpose of this report the analysis shall be on oil and gas operations with emphasis in the United Kingdom. According to (Oil and gas UK, the voice of the offshore Industry), the country has over 99% of the oil and gas production occurring under the seas surrounding the continental shelf. With a network of 14,000km lay down of pipeline connection and fitting for effective distribution and transformation of crude oil products which links close to 107 oil platforms which connects a large number of gas platforms and subsea installations. The total number of fields producing within the region is about 383 and 17 new ones came on stream in 2008. 3970 exploration wells and appraisal wells have also been drilled to further determine the reservoir extent and explore for new discoveries. £1.4 billion was spent in 2008 drilling exploration wells and appraisal wells which had 109 wells producing delivering 300-400MMboe. The United kingdom oil and gas operations provides a delivering solution to prolong the lifespan and efficiency of the UKCS. In 2004 UK was the fifth largest producer of offshore gas (Spends & Trends 2006). However decline has set in top fields in the UK, where oil and gas are seen to however pass their peaks (Spends &Trends 2007).

This report analysis the oil and gas industry and focuses on UK Industry operations. The report is structured to: 1.Give an understanding of the UK oil and gas industry and the mode of operation. 2.Evaluate the growth trends of the Industry in terms of its revenue, crude pricing, demand and supply, oil and gas production trend e.t.c. 3.Use PORTER’S, PESTEL and SWOT to analyze the macro and micro environmental factors that are likely to have an influence on the Industry operation. 4.Suggest probable strategy for the Industry.


Crude oil still remains a major source of energy. Report by (IEA, 2010) puts the average demand of oil at 1.67mb/d in 2009. UK’s oil demand has steadily been on the decrease from 2005 falling at a compound average rate of about 2.2%. Increase want for gasoline could be one of the factors that have lead to that. Oil would continue to serve the world and serve as a major feed for transportation for years to come. (Watson, 2010) in his report of issues facing the oil industry, world total energy consumption from 1980’s to 2030 showed a 1.6% growth rate with above 50,000MBDOE, from oil production and world gas production and world gas production greater than 50MBDOE. Following this growth trend, 2003-2030 experienced a 1.7% as compared to 1.6% experienced during the early years. EU total energy growth is about 8% from 1980-2003 reducing to about 0.5% probably due to crude oil decline in the region. Majority of the demand is used up by the transportation sector which represents about 70% of total oil demand this is probably due to the fact that substitutes means of energy for powering motor vehicles is on the average relatively low thereby leading to high demand in the products from crude. 2.3 Forecast Trend in Oil and Gas Production

According to the (Oil and Gas Activity Survey, 2010) over the next 2 to 3 years larger amount of production would be from crude instead of gas. In today’s terms if investment can be maintained at about £5billion/year then by 2020 the UKCS can...
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