Survey: UK oil, gas job losses continue, but optimism grows

The continuation of a global industry slump that began in mid-2014 has resulted in more than two thirds of UK oil and gas industry employers shedding staff over the past year, including operators by 15% and contractors by 7%, according to the UK’s 25th Oil and Gas survey.

However, confidence seems to be improving as the industry looks ahead. Two out of three respondents believe the sector has already reached the bottom of the current cycle or will do so within the next year, and a further 25% feel it will be within the next 1-2 years, said the survey conducted by Aberdeen & Grampian Chamber of Commerce in partnership with the Fraser of Allander Institute and sponsored by UK law firm Bond Dickinson.

For the coming year, operators are now predicting a 5% reduction in numbers compared with a 17% prediction made 6 months ago. Contractors foresee a 1% cut compared with their previous 2% prediction.

Confidence levels have improved for both the UK Continental Shelf (UKCS) and internationally over the past 12 months, albeit from the lowest point since the first survey in 2004. Twelve percent of contractors are more confident about their activities in the UKCS in the current year compared with 7% in May, while 47 are less confident, which is down from 75%.

As for international activities, two out of three respondents believe the sector has already reached the bottom of the current cycle or will do so within the next year, and a further 25% feel it will be within the next 1-2 years.

“We're likely to remain in an uncertain position through 2017 and ‘the bottom’ will arrive at different times and feel different for each company,” commented James Bream, research and policy director at Aberdeen & Grampian Chamber of Commerce.

A changing industry

Seventy nine percent of contractors said they would “definitely” or “possibly” be more involved in decommissioning in the next 3-5 years, and 53% said they would “definitely” or “possibly” be more involved in renewables. Seventy percent expect to be involved in unconventional oil and gas activity in the UK, with 64% involved outside the UK.

While 58% of firms expect no impact from Britain’s decision to leave the European Union, 31% expect the result to have a negative impact and 8% felt the impact would be extremely negative. Only 3% predict a positive impact.

The UK Oil & Gas Authority (OGA), established as an independent government entity in October, appears to be starting to have an effect, the survey says, with 40% of operators saying its creation has had a positive impact on their businesses.

Of those asked if skills shortages might arise in the future because of poor workforce planning, 39% said “yes” but thought it could be avoided. A further 27% also thought it was the case, but was unavoidable.

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