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
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