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67% of oil and gas companies axed jobs in 2016, survey finds

Published 29/11/2016

Oil and gas operators reported a 15% decline in their UK-based workforce over the period while contractors reduced staff by 7%
Oil and gas operators reported a 15% decline in their UK-based workforce over the period while contractors reduced staff by 7%

More than two-thirds of oil and gas firms have cut jobs this year, with more losses expected over the next 12 months, according to an industry survey.

The 25th annual Oil and Gas survey found 67% of businesses reduced employment in 2016, with 43% cutting pay and 40% significantly changing staff benefits as the low oil price continues.

Operators reported a 15% decline in their UK-based workforce over the period while contractors reduced staff by 7%.

There are signs job-shredding is slowing, however, with operators expected to cut staff by a further 5% in the next year - down from the 17% forecast six months ago.

Confidence levels have also improved, with 12% of contractors more confident about their activities in the the UK Continental Shelf (UKCS) compared to 7% in May.

Two out of three respondents believe the sector has already reached the bottom of the current downturn or will do so within the next year, with 25% feeling it will be within the next one to two years.

More than half (58%) thought the decision to leave the European Union (EU) would have no impact on their business, with almost a third (31%) expecting it to have a negative impact and 8% feeling that the impact would be extremely negative.

The survey is conducted by Aberdeen and Grampian Chamber of Commerce, along with the Fraser of Allander Institute and sponsored by law firm Bond Dickinson.

Uisdean Vass, oil and gas partner at Bond Dickinson, said: "The green shoots of recovery may be beginning to push through.

"People are slightly more optimistic about the future for both the UKCS and the international oil industry, but the improvement is from a very low point.

"The industry has had to adapt and embrace change ... and companies are emerging from the oil slump as far leaner operations that are more competitive on price and performance.

"Sadly, this has come at the great cost of many thousands of jobs but companies who have shed staff have simply had to rationalise or die."

James Bream, research and policy director at Aberdeen and Grampian Chamber of Commerce, said: "We're likely to remain in an uncertain position through 2017 and 'the bottom' will arrive at different times and feel different for each company.

"It is clear that companies are striving to become fitter, leaner and they are working hard to look for new markets to secure their future and employment levels where that is within their control.

"There is no question of complacency in the north-east and our brilliant people will continue to demonstrate that the oil and gas sector should be considered a success story in generating economic value for the UK economy."

Energy Minister Paul Wheelhouse said: "The Scottish Government is determined to do everything it can to provide the support the oil and gas sector needs during these challenging times for the industry.

"The Energy Jobs Taskforce is developing long-term solutions to the structural challenges affecting the oil and gas sector.

"Our Enterprise Agencies have engaged with more than 700 companies in the oil and gas industry, and committed £12.5 million to support innovation and business resilience.

"Meanwhile, the Transition Training Fund, launched in February, has now approved funding for over 1,100 individuals affected by the downturn - exceeding the 1,000 individuals the fund was designed to support in its first year of operation.

"But it's the UK Government which still retains the main powers to support the oil and gas industry.

"We all know significant opportunities remain in the North Sea, but measures are urgently required to encourage new investment.

"That's why Scottish ministers were bitterly disappointed last week when the Chancellor ignored their calls and failed to use the Autumn Statement to deliver the support the industry deserves.

"While this clearly remains a challenging time, it is encouraging to see the latest survey from Aberdeen & Grampian Chamber of Commerce finds that business confidence across the sector is slowly beginning to improve."

A spokeswoman for the UK Department for Business, Energy and Industrial Strategy said: "We fully recognise the huge importance of our oil and gas industry.

"That is why the Government has provided radical measures worth £2.3bn as well as supporting the Oil and Gas Technology Centre, to ensure the UK remains at the forefront of innovation in the oil and gas industry and remains and an attractive destination for investment."

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