Scotland’s Oil Industry Might be Down, but It Isn’t Out

by Jon Mainwaring, Senior Editor, EMEA 

Recently, I read the distressing news that former oil and gas workers in Aberdeen were having to rely on food banks – the UK’s charitable solution to food poverty – in order to help make ends meet. Apparently, local charities in the Scottish city saw double the number of food parcels delivered to the needy during 2015 than in 2014. Meanwhile, there was a sharp rise in people claiming out-of-work benefits in northeast Scotland towards the end of last year.

The low oil price has had a devastating short-term effect on Aberdeen and northeast Scotland. So much so that both the central UK and Scottish governments have been spurred into action, with various tax-payer funded initiatives being announced during the past few weeks that are designed to both support the oil and gas industry in the region and help train its former workers so that they can gain new skills that may help them find work in other sectors.

But although these hurried measures are no doubt needed to help the Scottish oil and gas industry and the people of northeast Scotland through a difficult period, they should not be seen as an indicator that the game is up for the region when it comes to its involvement in the energy sector.

First of all, there is a very large amount of decommissioning work to be done in the North Sea over the next decade. During this period, some GBP 17 billion ($25 billion) will be spent on scrapping 79 platforms and plugging 12,000 wells, according to figures from DecomWorld. Such an amount of work should keep many oilfield engineering and services firms busy.

Then there is the fact that oil and gas is not the only source of energy that the North Sea produces. The offshore wind industry is continuing to grow significantly in the UK and Netherlands zones of the North Sea, and offshore oilfield services companies are becoming increasingly aware of the opportunity to employ their know-how within this sector. Earlier this month I had a chat with one such firm, whose business was wholly dedicated to oilfield services just four years ago, but today has around a third of its turnover accounted for by the offshore wind sector.

Finally, northeast Scotland remains an oil and gas hub that gets a large chunk of its revenues from international markets. Scotland’s oil and gas supply chain sells its products and expertise to markets as far away as Australia, while exports to oil and gas projects in Africa account for several billion dollars annually.

The Scottish oil and gas industry may be down at the moment, but the game is far from up.

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