North Sea oil firms scramble for staff

Almost every contractor in the oil and gas sector is planning to hire workers next year, despite the uncertainty created by the vote on independence.
The future of the North Sea oil industry is no clearer after the publication of the white paper. Picture: GettyThe future of the North Sea oil industry is no clearer after the publication of the white paper. Picture: Getty
The future of the North Sea oil industry is no clearer after the publication of the white paper. Picture: Getty

A survey by Aberdeen and Grampian Chamber of Commerce, published today, found that the referendum is a key issue governing the future of the industry.

But it also shows that there is significant optimism in the sector, with a record 98 per cent of North Sea contractor firms looking to recruit in the next 12 months.

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In the past year, 58 per cent of operators and 65 per cent of contractors increased their headcount, and average pay increased much faster than the national average.

Already the industry’s growth is being constrained by skills shortages in key areas, and most companies reported recruitment and retention difficulties.

On the issue of the referendum, the report, compiled before the publication this week of the SNP’s white paper, reveals that executives in the high-growth sector feel they have a lack of clarity on issues such as tax – both personal and corporate – and regulatory issues.

They said this lack of information is hampering their ability to establish business plans beyond 2014.

Kenny Paton, oil and gas partner at Bond Dickinson, the law firm that sponsored the report, said the white paper shed little extra light on these matters.

“More and more of our clients in oil and gas and other sectors are raising questions about the implications of the result of the referendum,” he said.

But Paton believes big changes are due to happen whatever the outcome in September.

He said: “The report, on the face of it, points to a buoyant industry but when you scratch beneath the surface a number of significant challenges are revealed – challenges which will have to be faced whether or not Scotland votes ‘yes’ in ten month’s time.

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“Radical change is essential if Scotland or the UK wishes to make the best of what oil and gas which we have left and to guarantee a bright future for the industry in Scotland when North Sea reserves run out.”

He points out that, despite high levels of investment, production has fallen, exploration is “worryingly low” and rising costs may impact those developments which it was hoped might soon replace some of the diminishing fields.

In the past week alone, Statoil and Chevron have announced delays to the development of the Bressay and Rosebank fields in which more than $15 billion was to be invested.

“The basic problems which the industry is facing may need fundamental solutions including a much more active role for the government via a regulator,” Paton said.

He thinks it is significant that the white paper refers to the recent interim report compiled by industry grandee Sir Ian Wood for Westminster, which recommends intervention to ensure collaboration over infrastructure.

He points out that significant tax devolution is due even in the event of a “no” vote.

“Under devo-plus or devo-max there may well be calls for the allocation of oil and gas revenues directly to Scotland,” he said. “This may in turn lead to the creation of a Scottish petroleum jurisdiction. Many of these sorts of issues could come live if there is a ‘no’ vote.”