Media Release: Oil and gas sector bounces back but skills crisis warning in Aberdeen Chamber of Commerce survey


IN a climate of economic recovery and stable oil prices the UK oil and gas sector has returned to growth with signs of increasing investment, consolidation and acquisitions.

These are some of the key findings to emerge from the latest Aberdeen & Grampian Chamber of Commerce survey.

Says a spokesperson: “The survey found that business confidence has risen amongst both operators and contractors, not withstanding concerns rising from events in the Gulf of Mexico although the long-term implications for the North Sea are not yet clear.

“The survey, sponsored by McGrigors and conducted by the Fraser of Allander Institute, is the 13th in the survey series and draws on responses from oil and gas operators and contractors to identify current trends in exploration levels, recruitment and skills, investment, de-commissioning and new market developments.

“The findings are used to identify how the performance of this sector might impact on the wider business community.

“But the signs of growth and optimism, come with associated problems around skills shortages which have re-emerged as the demand for staff has increased, especially for experienced engineering and specialist skills.

“The main sources of recruitment have continued to be other oil and gas related companies in the UKCS. The main reason for loss of staff continues to be leaving to work for competitors or being deployed to other oil and gas regions.

“Few respondents reported staff leaving to enter the renewable sector, although as interest in renewables grows, this could become an issue in the future.”

Robert Collier, chief executive of Aberdeen & Grampian Chamber of Commerce, said this survey has shown the UKCS is in the process of bouncing back after a tough 2009.

He said: “Our findings show that the oil and gas sector, especially operators, are more attracted to invest in the revival of the UKCS and global petrochemical markets than the projected renewable opportunity, and this raises questions about the ambitious targets set out by the Scottish Government.

“There is more interest in de-commissioning which is seen as a far more realisable source of work.”

Bob Ruddiman, McGrigors head of Energy, added: “The report suggests the industry has tackled the recession better than many other sectors and that business confidence and activity levels are on the rise. This rise in optimism has however once again unearthed an increasing demand in the retention of and potential shortages of highly skilled and experienced engineering staff.

“Whilst staff retention in light of the interest in renewables was only seen as a medium term issue I believe the industry needs to be vigilant to the possible impact the offshore wind, wave and tidal industry may have across the entire supply chain.

“The opportunities to work in the offshore environment look bright in the medium-term and the real gain for jobs will be if we can provide the supply chain with the workforce for the whole offshore energy industry rather than just sub-sectors.”

The key findings from this 13th survey are:

• In a climate of economic recovery and stable oil prices the global oil and gas sector and the UKCS has returned to growth with signs of increasing investment, consolidation and acquisitions by both suppliers to the UK market and countries, through their national oil corporations, to secure longer term supplies;

• Rising business confidence has returned amongst both operators and contractors, notwithstanding concerns arising from events in the Gulf of Mexico (GOM), though the long term implications for the UKCS are not yet clear;

• Rising activity levels are evident, although from the low base in 2009, and spare capacity is evident. There is now increased interest in decommissioning and contractors are increasingly expecting to enter this market in the medium-term;

• Signs of increasing demand for staff are evident in the increasing recruitment activity, in the demand for additional staffs, and in the rising trends in working hours being above planned levels;

• Skill shortages, a feature of previous years, have re-emerged as the demand for staff has improved. Recruitment and retention problems have increased in 2010 and shortages of experienced engineering and specialist skills are again reported;

• Whilst the average pay increase in 2010 remained modest and little changed from 2009, the percentage reporting increasing pay in 2010 was almost double that of 2009 and reductions in the terms and conditions of employment were less widespread than in 2009;

• The main sources of staff continued to be other oil and gas related companies in the UKCS. Amongst both operators and contractors the main reasons for loss of staff continued to be leaving to work in other oil and gas companies; leaving to work or redeployed to other oil and gas regions;

• Notwithstanding the rising interest in renewables and the apparent synergies between the sectors, interest in entering this market was only seen a medium term possibility and few respondents reported staff leaving to enter this sector; and

• Over the next three years the majority of operators and contractors expect to increase staff. For operators this will be done by increasing the numbers of contracted staff within the company, whereas for contractors, direct employment to the company will take place.


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