North Sea energy firms are increasingly pursuing projects outwith traditional oil and gas as the industry seeks to diversify and reduce its carbon footprint, new research suggests.
More than half (52 per cent) of oil and gas businesses have recorded increasing demand for their products and services in non-oil and gas projects, according to the latest Aberdeen & Grampian Chamber of Commerce report.
The 31st Oil and Gas survey, in partnership with the Fraser of Allander Institute and KPMG UK, found a further 25 per cent of respondents are actively pursuing work outwith the traditional sector.
Almost half (49 per cent) of North Sea operators and contractors are working to reduce their carbon footprints or develop low carbon services.
A record 86 per cent of firms expressed some likelihood of engaging in decommissioning activity in the medium-term, with fewer than a third expecting to be 100 per cent focused on oil and gas by 2025.
Shane Taylor, research and policy manager at Aberdeen & Grampian Chamber of Commerce, said: “It’s clear that the energy mix in the future will be far more diverse and for our existing supply chain there’s huge opportunity to be seized from diversifying into new markets and sectors proactively.”
Oil price concerns
The report pointed to rising confidence levels, with 43 per cent of contractors reporting an increase in production activity – up from 28 per cent 12 months ago.
However, it claimed that the downturn which hit the industry a few years ago remains a risk factor, as 88 per cent of respondents cited the price of oil and market stability as their biggest business concern for the next ten years.
Of those firms who have considered potential diversification, 34 per cent flagged concerns around profitability and return on investment as the main barrier, closely followed by experience and skills challenges at 31 per cent.
One quarter pointed to specific difficulties recruiting for non-traditional roles.
Taylor added: “Fundamentally, few of the major challenges facing firms in the sector are likely to be solved overnight. What is clear is that some of the big issues, particularly talent attraction and the energy transition, will benefit from a collaborative approach to showcase where the industry is actively taking action.
“Proactively pursuing these strategies, and demonstrating real success, will be key in engaging the talent the industry needs to continue to contribute to the UK’s energy security for decades to come.”
Martin Findlay, office senior partner and tax partner at KPMG in Aberdeen, said: “Despite continuing uncertainty in the wider Scottish and UK economies, and the impact of climate change on investment priorities for providers of capital, the latest survey paints a positive picture for the oil and gas sector with growing confidence levels driven by a deep sense of resilience and an increasing focus on innovation.”