Scotland's economy: North Sea oil sector showing improved confidence
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More than half of oil and gas firms are planning for growth even though they say the slide in the pound and higher resulting costs remain “challenges” for the sector, notes the sixth annual Bank of Scotland Oil & Gas Report.
The study, which gathers views from across the industry and its supply chain, found that business confidence has grown in the last year, with the net balance of firms that feel optimistic surging to 39 per cent. That is up from a positive balance of just 2 per cent in 2016.
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Despite continued low oil prices, growth is also on the agenda for more than half (58 per cent) of companies. The firms anticipating growth said they expect, on average, growth of 26 per cent of their current annual turnover in the next 12 months, up from the 49 per cent who expected an average of 17 per cent growth in the 2016 survey.
Looking ahead to the next 12 months, firms said they are looking to expand by generating organic growth (27 per cent), diversifying operations (22 per cent) and through mergers and acquisitions (9 per cent).
Stuart White, Bank of Scotland regional director, mid markets, north of Scotland, said: “While the blow from depressed oil prices has been severe for the many businesses and individuals impacted by job losses, the oil and gas sector is proving itself to be among one of the most resilient in the UK.
“The expression of confidence in this year’s survey reflects an industry that appears to be turning a corner, with conditions for growth more favourable than they have been in recent times.”
Amid continuing macro-economic headwinds and a supply glut, the oil price yesterday fell 1.5 per cent to $46.08 a barrel. That compares with more than $100 a barrel in the summer of 2014, since when the oil and gas industry has mothballed projects, sold billions of pounds worth of assets and made tens of thousands of workers on rigs and in oilfield services redundant.
However, today’s survey of the energy sector and its supply chain found that job cuts appear to be slowing down.
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Hide AdThe percentage of firms anticipating job cuts in the next 12 months is down from 32 per cent in 2016 to 19 per cent this year. More than half (55 per cent) of companies said they expect to increase their overall headcount over the coming year.
Reflecting on the past year, a fifth (19 per cent) of firms said they had seen a net increase in staff numbers, hiring in some areas and making redundancies in others. A quarter of businesses (25 per cent) made no changes to their headcount.
A net balance of 17 per cent of firms said they plan to create jobs in engineering and fabrication; 10 per cent said in equipment supply and rental. Headcount was expected to reduce in drilling (net balance of -12 per cent) and subsea work (net balance of –5 per cent).
Paul de Leeuw, director at Robert Gordon University’s Oil & Gas Institute, said: “It is encouraging to see that many companies are looking again at returning to profit and recruiting new staff.”