Sector News

Oil downturn to wipe out over a quarter of North Sea jobs

June 10, 2016

The UK’s oil and gas industry will lose a total of 120,000 jobs by the end of this year as a result of the market downturn which has slashed value from the struggling sector since mid 2014.

Official figures from trade group Oil and Gas UK have laid bare the full impact of the historic decline in oil market prices. The global price crash has taken a particularly worrying toll on the ‘supermature’ North Sea basin which is saddled with some of the highest costs and lowest production levels in the world.

Oil prices have recovered by 80pc since hitting twelve year lows of $28 a barrel in January but even at a prevailing price of around $50 a barrel oil is worth less than half than what it did 2014 when North Sea jobs stood 450,000.

Last year the number of jobs supported by the UK’s oil and gas industry fell by an estimated 84,000 to around 370,000, and are forecast to fall a further 40,000 by the end of this year.

Companies across the breadth of the industry have been forced to make deep cuts to their job numbers in order to shore-up market-weakened balance sheets.

The UK’s largest oil companies, including Shell and BP, have posted record losses in the last year while smaller explorers wrestle with debilitating debt and the looming threat of insolvency. The risks facing oilfield service companies are particularly large because they rely on contracts with the cash-strapped producers for their own income.

Advisory firm EY warned that a third of oilfield service firms could be wiped out from the sector by the end of the year as oil producers pull back from uneconomic ventures.

Investment is expected to fall by almost 90pc this year as companies continue to slash spending and profitability has plunged to lows not seen since 1997.

The Office for National Statistics shows that explorers active in the UK Continental Shelf (UKCS) have seen the rate of return on their investments fall from just 2pc in the third quarter of last year to 0.6pc in the last quarter of 2015.

By Jillian Ambrose

Source: The Telegraph

comments closed

Related News

August 23, 2019

The higher purpose of being a CEO

Borderless Leadership

LinkedIn Twitter Xing EmailWhen I left my second large company experience to become President of a small manufacturing company I did so driven by ego; I fancied the title. Soon […]

August 23, 2019

As Brexit nears, Britain’s drugs, devices and pricing regulators seek the exit

Life sciences

LinkedIn Twitter Xing EmailFirm details on exactly how the U.K. will regulate new medicines is still to be decided after it leaves the EU later this year (caveats on timing […]

August 23, 2019

The Simply Good Foods Company acquires Quest Nutrition for $1bn

Consumer Packaged Goods

LinkedIn Twitter Xing EmailThe Simply Good Foods Company, the owner of Atkins-branded food products, has secured a deal to acquire protein snack maker Quest Nutrition for $1 billion. Quest, which […]

How can we help you?

We're easy to reach