Britain’s upstream oil and gas industry is maintaining a stable and positive outlook according to the business confidence index for the second quarter of the year, published by Oil & Gas UK today (22 August).

The overall index rose by one point from 64 to 65 on a 100 point scale, the highest since the series began almost four years ago. The modest rise in confidence was driven by the operators while the outlook of contractors, who raised concerns over manpower, cost inflation and tightening margins, remains unchanged.

David Ripley, Oil & Gas UK’s supply chain director, said: “The general confidence level is similar to the previous quarter with activity remaining high which is encouraging. Operators are busy with a number of major projects, including several sanctioned last year, and appear buoyed by the tax changes aiming to promote investment that were announced following constructive dialogue between the Government and industry.

“Contractors continue to enjoy high activity levels fulfilling existing contract commitments in the UK as well as expanding the export of their services and products to clients around the globe. They have, however, become increasingly aware of the challenge of sourcing skilled personnel and equipment, for example drilling rigs, in a tight market, with operating and manpower costs rising and margins being squeezed.”

The key findings of the survey for the second quarter of 2012 are:

•Overall the Oil & Gas UK index measured 65, an increase of one point from 64 in Q1 2012.

•The operators’ outlook increased by two points from 61 to 63; the majors’ rose by 3 points from 57 to 60 while the independents increased by 2 points.

•The confidence of the contractor sector remained at the same level as Q1 2012 at 66 and all four sub-sectors were well within the 60s range:

– Drilling and well services fell by 6 points from 70 to 64

– Facilities engineering, operations and maintenance rose 3 points from 63 to 66

– Marine and subsea remained well up in the high 60s with 67 points

– Support services dropped two points from 67 to 65.