ABERDEEN, Scotland—Costs of operating in the U.K. North Sea are still too high to make the region economically viable, according to Robin Allan, Premier Oil’s director, North Sea and exploration.

Allan told delegates at SPE Offshore Europe 2015 in Aberdeen that it is easier to do business in Vietnam than in the U.K. where costs must come down further.

“I’m not that optimistic,” he said. “I think most of the cost savings we have seen have come from cutting out work that was not absolutely necessary, from reduced fuel costs and from renegotiating such contracts as we were able to renew. I don’t think the cost of this basin has reduced to the point where it is economically viable going forward.”

However, costs in the company’s businesses in Asia are “incredibly much lower on every aspect compared to here,” Allan said.

“And it is not just about the weather or the sea state in the North Sea,” he added. “It is a way too high a cost base. Unless the collaborative work goes to a whole new level, I don’t see a particularly optimistic future for the U.K. North Sea.”

Premier is in the middle of two large developments in the region, Solan and Catcher, and the company is committed to continuing the projects and looking for others, he said.

“But it is not a competitive basin for most of the companies which have a desire to work internationally as we do. There are plenty of other places where the cost of doing things is incredibly much less.”

He compared the furore caused when offshore workers on the UKCS were asked to move to a three-week-on, three-off shift pattern from two on three off to those in Vietnam.

“In Vietnam we had a quick talk with our key suppliers and with the government one day, sent out an email the next and the entire workforce moved to a three-on, three-off pattern for the next rota,” he said. “We did not get a single complaint from anyone anywhere—and yes they are unionized. It is an attitude issue. They saw the need and the government was fully behind Petrovietnam, and it happened.

“It is just so completely different here and I think we have got a long journey ahead,” he continued. “I’m sorry if that sounds a bit bleak, but I don’t think it’s a surprise to anyone here.”

Allan also called on the majors to improve the way they deal with the smaller players in the U.K.

“The view from a smaller company is that the majors—the way they approach commercial problems and difficulties in tackling all these undeveloped discoveries—if you are a BP or a Shell or an Exxon, you don’t get promoted by being nice to an Enquest or a Premier, you get promoted for sticking one over on them. That’s what they want to see.

“The majors want to see aggressive commercial behavior where they win and someone else loses,” he added. “That works very well for them as companies globally, but that is not a model that can help sustain the basin.”

Offshore