I think one story will continue to dominate the headlines in 2015 because of its overarching impact on all sectors: the oil price and how low we can expect it to go.
We know that the current situation is the result of a weakening global demand for oil triggered by a slow down in Chinese economic expansion, and an over supply of the commodity largely as a result of the growth of the unconventionals or shale sector in the USA.
OPEC's decision in November not to reduce production from its member states has left the market to find its own optimum commodity price. It's been suggested that one intention of this strategy is to curb the growth of US shale by making it uneconomic to produce at a certain price of oil per barrel. As a result we have seen the oil price fall by approximately 40% since the summer, down towards the $50 level and some forecasters have predicted it may fall as low as $40 pbbl. However, the impact of OPEC's decision, pushed through by its most influential member Saudi Arabia, is extending far beyond the US shale plays. Many of OPEC's own members whose economies are based on oil income have called for a production cut, while for areas like the North Sea there is little option but to weather the storm, watch and wait, and see what the landscape looks like on the other side.
As a result, I think the North Sea could once again be in for another period of challenge which may extend beyond 2015. There is little that can be done to halt the progress of some of the region's existing longer term projects, but we may see a re-evaluation of some planned developments which will impact in the years ahead. I also believe we will see an increase in discussions on decommissioning.
In advance of the price fall, there have been calls for increased exploration and production in the North Sea but the current situation has given a much greater focus. Against this backdrop, the role of the UK's new Oil & Gas Authority, bringing together the industry and the Treasury, will be critical. As 2015 is also an election year in the UK, we would hope for greater support in terms of an improved tax regime from a new government.
Onshore UK, it will be interesting to see to what extent the country's fracking industry develops, given the current oil price and the impact of a new administration.
In terms of technological development, I expect the subsea sector and its supporting services to continue to lead the way with growth in separation and 20k psi capabilities as the industry progresses towards the subsea factory or village. While all sectors of the industry may face a degree of belt tightening in the short term, I think the longer term prospects offered by larger subsea projects will remain attractive for those looking beyond the current downturn.