Sector News

North-sea job losses have not slowed down over the past year, but there are signs that industry has turned a corner, the 25th Oil and Gas Survey said.

The study also showed that the sector had taken a pay cut for the first time in at least 12 years as basic salaries and conditions were renegotiated.

But it said 29% of companies believe the downturn has already bottomed out and 36% think it will in the next 12 months.

Contractors delivered another promising signal, with 29% saying they expect to take on more employees next year.

Uisdean Vass, Aberdeen-based oil and gas partner at law firm and survey sponsor Bond Dickinson, said “green shoots of recovery may be pushing through” and that companies were emerging from the oil slump leaner and more competitive.

But Mr Vass said any improvements had “come at the great cost of many thousands of jobs” as businesses have been faced with just two options: “rationalise or die”.

Also sounding a note of caution, AGCC research and policy director James Bream said the outlook for 2017 was still “uncertain” and that “the bottom” would arrive at different times for each company.

The sector has endured a dreadful two years. Industry body Oil and Gas UK has predicted that the sector is now supporting 120,000 fewer jobs across the extended supply chain than it did in late 2014.

Just over two-thirds of respondents said they had shed employees in the last 12 months. In that time, operators have reduced the size of their workforces by 15% while contractors have suffered a 7% decline.

But job losses could slow in the year ahead. Operators now predict a 5% drop in staffing levels in the next 12 months, compared to a 17% decrease when the previous survey was released in May.

Contractors anticipate reducing their headcounts by an average of just 1%.

In terms of income, average pay for oil and gas employees went down by 4.5%.

The first edition of the Oil and Gas Survey was published in 2004, but this is the first time it has recorded an overall pay drop.

Thirty-eight percent of respondents said they were paying the same amount as before, but 43% have cut pay packets.

Two in five made significant changes to terms and conditions, which impacted not only salaries and bonuses, but also shift patterns, working hours, pension contributions, medical plans and benefits.

A dispute between unions and Wood Group over workers’ pay and conditions led to the first offshore strike in a generation, starting in July.

In an indication of what the sector’s future looks like, 36% of contractors said they would definitely be more involved in decommissioning in the next three to five years.

Just over half said they would “definitely” or “possibly” be more involved in renewables.

Seven in 10 firms expect to be involved in unconventional oil and gas activity in the UK medium-term.

Fifty-eight percent predicted Brexit would have no impact, 39% said it would either be negative or very negative and 3% said it would be positive.

By Mark Lammey

Source: Energy Voice