Firms worry as North Sea wages surge past £73,000

Wages in the UK oil and gas industry are set to hit an average of £73,600 by the end of the year as companies desperate to expand run into staff shortages.

A survey of hundreds of firms operating in the sector, published today, reveals the average wage is expected to rise 15 per cent over the course of this year.

The report, by jobs website Oilandgaspeople.com, found that 70 per cent of oil and gas businesses were worried that wages are rising too fast.

Kevin Forbes, chief executive of Oilandgaspeople, said: “Our survey shows that with increased investment in North Sea oil, demand for qualified staff is set to reach an all time high, which will exacerbate an already serious skills shortage.”

He said the problem was being further exacerbated as UK candidates head abroad to earn even higher wages thanks to a huge demand for workers who have qualified and gained experience in the UK.

The companies surveyed pointed to a number of different reasons for the skills shortage, with a third blaming the fact there has been too little investment in apprenticeships due to an assumption that North Sea oil was in decline.

Others suggested that the industry was caught out by the unexpected success of new technology that has allowed firms to pump lower grade oil and enabled more reserves to be exploited.

Many executives were also concerned by the exodus of trained workers to other oil hotspots.

Last month’s annual economic report from trade body Oil & Gas UK predicted that capital investment in the North Sea will hit a record £13.5 billion this year, up from £11.4bn in 2012.

The report forecasts that production levels will continue to fall but firms will spend more and more cash squeezing out the oil and gas that remains.

Interest in harder to access reserves has grown in recent years as technological advances and consistently high oil prices made production more economical.

Investment was given a further boost last year when Chancellor George Osborne introduced new tax breaks to encourage firms to keep pump oil from older and smaller fields.

Such production is often labour intensive, and demands more equipment and services from the supply chain.

Forbes said: “The companies are right to pinpoint the dual impact of historic lack of training and pressure from well-paid jobs abroad.

“With the record investment in North Sea oil in the last few months, this pressure on wages and skilled staff does not look likely to end any time soon.”

But Forbes said there is a solution to the problem. He argued that the UK government “needs to step in and incentivise companies to invest more in people”, urgently.

“So many people want to get into the industry but there is very little out there in the way of guidance in how to go about that,” he said. “A lot more needs to be done and now is the time for the industry and government to take action.”