by Andreas Exarheas, Assistant Editor, EMEA
A significant number of oil and gas firms operating on the UK Continental Shelf don’t expect employment levels to rise within the region over the next 12 months, according to the 24th Aberdeen & Grampian Chamber of Commerce Oil and Gas Survey.
Out of the 126 firms surveyed in the report, which employ a total of 73,624 employees in the UK, 39 percent expect employment to remain the same in the next year and 30 percent think further staff cuts will be enforced during this period. Sixteen-percent of respondents were unsure if there would be more or less opportunities for workers over the next 12 months and just 15 percent expected job numbers on the UKCS to increase.
On the surface, things don’t look too great for the UKCS in terms of employment in 2017. After a year of deep cuts in the region, companies just aren’t that optimistic about the future. It’s important to note, however, that the AGCC survey was conducted in March 2016, when the price of Brent oil was hovering below $40 for much of the month. From mid-April to the beginning of June, the oil price hasn’t dipped below $40 once. Instead it has gradually climbed to just below the $50 mark, which is a significant threshold for the North Sea, and wider UKCS, oil and gas industry.
At $50 per barrel, two-thirds of the fields currently producing in the North Sea remain economic, David Rennie of Scottish Enterprise told Rigzone in 2015. BP plc echoed the impact of $50 Brent earlier this year, stating that prices slightly above that mark would encourage more drilling. Looking slightly over that benchmark, an average of $53 per barrel would mean the world’s 50 biggest publicly traded companies in the industry could stop bleeding cash, Bloomberg reported Wood Mackenzie Ltd as saying.
With an almost $10 difference in the price of Brent oil from the time the report was conducted to today, it seems like the landscape for the future of the UKCS oil and gas sector has changed slightly. If the survey was carried out amidst the current oil price, perhaps the employment outlook over the next 12 months wouldn’t be so bleak.