Although the industry is still reeling from hundreds of job losses announced earlier in the year, research by the Bank of Scotland found that nine out of ten UK oil and gas firms intend to expand over the next year.
The new jobs may have been cause for some cautious optimism in the sector, but the number created will still fall short of the 9,725 posts created over the past two years.
The Bank of Scotland report published today surveyed 101 companies and found on average they expected the price of Brent Crude to make a modest increase to $55 a barrel by January next year. The falling value of oil saw the price dip below $50 per barrel at the beginning of this year, a slump that has proved hugely damaging to the North Sea industry.
The decline in the offshore sector, however, has seen an acceleration in decommissioning work, which takes fields out of production but has an upside of creating work for construction and marine services in the short term. Over the last year there has been a 38 per cent increase in firms expressing an interest in decommissioning work – a trend that was particularly striking among the major oil companies.
According to the report, UK companies have become more enthusiastic about diversifying into onshore shale production with the number of firms expressing a strong interest in fracking-stye extraction techniques increasing by 27 per cent since last year. Enthusiasm for renewable energy sources has also rocketed, with a 35 per cent increase in firms expressing a strong interest.
Firms felt opportunities would arise from the prospect of mergers and acquisitions with a quarter (24 per cent) of firms surveyed hoping to merge or acquire compared with just a tenth (9 per cent) with such ambitions in last year’s survey. The interest in merging was particularly evident in small and medium businesses.
The proportion of companies considering international expansion increased from 64 per cent in last year’s survey to over 91 per cent this year, with North America (35 per cent), the Middle East (26 per cent) and South America (25 per cent) were the most popular regions.
Despite the negative effect of the low price, the report found that it was “not necessarily the most significant challenge facing the industry as a whole”.
The research found that when firms were asked to identify their three biggest worries for the future, commodity price was fifth, with 28 per cent of companies mentioning it. The most common concern was the increased cost of production, with this raised by 35 per cent of firms, followed by the lack of skilled workers and the exchange rate, which were both cited by 30 per cent. Twenty-nine per cent of firms were concerned about the ageing workforce.
“Despite the price of Brent crude at the time of the survey being at a six-year low of $50 per barrel, this was not necessarily the most significant challenge facing the industry as a whole,” the report suggested.
A fifth (21 per cent) of firms also said the taxation regime was one of their worries.
A total of 73 of the 101 firms questioned expected to increase their workforce, with only nine expecting this to fall and 19 not anticipating any change in headcount.
The report added: “Four companies are expected to create between 500 and 1,000 jobs, and one firm more than 1,000 posts.
“When the estimates of net job gains and losses by the 101 firms surveyed are summed, a net total of just under 8,000 jobs is expected to be created.”
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