Jobs linked to offshore oil and gas in the UK have dropped sharply since 2014 along with commodity prices. New employment figures indicate about 330,000 jobs in the UK in 2016 will stem from oil and gas, down from more than 450,000 in 2014.
“We cannot underestimate the impact the global downturn in the industry is having on the UK economy, nor the personal toll for those who have lost their jobs, and the effect on their families and colleagues,” said Deirdre Michie, chief executive of Oil & Gas UK.
OGUK requested the analysis from Experian, a marketing services company. It focused on three categories of employment:
• Direct employment provided by companies involved in extraction of oil and gas, and supply chain companies that directly support the activity.
• Indirect employment across an extensive supply chain that also exports goods and services overseas.
• Induced jobs created by industry’s spending in the wider economy, such as in hotels, catering, and taxis.
After peaking at more than 450,000 in 2014, jobs fell to about 370,000 in 2015. The 330,000 cited for 2016 includes a forecast of 40,000 job losses by yearend.
In 2014, direct employment was 41,700; indirect, 201,000; and induced, 211,100, for a total employment of 453,800.
In 2015, direct was 38,200; indirect, 160,600; and induced, 170,800, for a total employment of 369,700.
The 2016 forecast is direct, 34,000; indirect, 151,500; and induced, 144,900, for a total employment of 330,400.
“The industry has been spending more than it is earning since the oil price slump toward the end of 2014,” Michie said. “This is not sustainable and companies have been faced with some very difficult decisions.”
OGUK noted that more than 20% of the oil fields on the UKCS are operating at a higher unit cost than the current price of about $50/bbl.
“If investment fails, then so will jobs,” she said. “The interventions we make now will be critical to shape the industry’s direction and help stem future losses.”
With up to 20 billion bbl of oil and gas still to recover, “this region is still very much open for business,” she said.