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Last Year Saw a Record Number of Oil and Gas Firm Insolvencies

  • Publish Date: Posted over 7 years ago

The Independent has reported that there was a record number of insolvencies for oil and gas companies in 2016, according to a study carried out by Moore Stephens, the accountancy firm. 

As part of the global drive to create a de-carbonised society, 16 fossil fuel producers went bust last year, compared to absolutely none just four years previously.

The report's authors have warned that further job losses in the sector seem to be inevitable as the messages around clean and renewable energies continue to embed. They have warned that this could lead to 'desolate communities' in some areas and have flagged up the need for retraining for the emerging new industries of the future.

The reason for the 16 gas and oil companies going bust was primarily a direct result of the oil price dropping to less than $50 for most of 2016, compared to a previous average of c. $120 a barrel. This downward pressure was more than smaller operators could cope with, and they lacked the scale of large organisations with diversified businesses to fall back on.

The research lead, Jeremy Willmont, said that the collapsing oil price had already stretched many British fossil fuel companies to their limit. He added that the past 15 years had seen a growth in independent UK firms producing and exploring across the globe. However, he saw further tough times and insolvencies ahead unless the oil price resumed an upward trajectory.

He pointed to further difficulties ahead for North Sea oil producers in particular and the decommissioning of offshore rigs. 

Greenpeace has joined the call to retrain fossil fuel workers, saying that climate change science will only get stronger and mean that the future lies in renewable energies.