Fresh investment buoys oil and gas sector

Wednesday 28 August 2013

Record levels of investment in the oil and gas industry are contributing to a favourable environment for contractors, according to the latest Economic Report from Oil and Gas UK.

Around 450,000 jobs were supported by the energy sector over the course of this year, many of which were the kind of highly skilled roles that are filled by contractors. Of these 36,000 were employed by operating companies, around a third of whom worked offshore.

But the industries that support oil and gas industry activity were also faring well - 200,000 workers were employed within the wider supply chain. More broadly, another 112,000 were induced by the economic activity of oil and gas workers, demonstrating the significance of the energy sector to the wider UK economy.

In terms of specialist skills, contractors with subsea expertise are among those who are likely to be busiest in the near future. Since 2010 another 16,000 positions have been created in the subsea sector, meaning that 53,000 people are now directly employed in the category. Engineering, construction and diving roles together accounted for nearly half of the whole workforce, indicating that these are the areas where demand is likely to remain strong.

The UK enjoys a position at the core of the global subsea industry, as the report found that over 800 companies are active there. Since small and medium-sized businesses make up the majority of these firms, the chances are that shortages of skills will keep contractors in demand for some time.

But well services is another category where activity is strong - last year firms providing drilling, completion, testing and maintenance services for oil and gas wells reported the highest gross revenue since records began in the mid-1990s. Oil and Gas UK says this is because the wells being opened are more technically complex and rely more heavily on the specialist skills of highly qualified and knowledgeable contractors. Perhaps this is why there were 13,000 highly skilled roles in the sector last year, an increase of ten per cent from the year beforehand. Since the report points out that this subsector is usually a good barometer for the state of the industry as a whole, it appears the future is positive for a sector which hosts thousands of UK contractors.

However, concerns remains about declining production. Only nine new fields began producing in 2012, drawing together total reserves of 146 million barrels of oil equivalent. Even though the UK remained Europe’s third biggest gas producer and second largest oil producer, annual production did fall by a noticeable 14.5 per cent. Despite the fact that 15 fields are set to start producing this year and three fields are due to come back onstream, production forecasts have been revised downwards.

“The industrial strategies launched by both the British and Scottish governments provide a clear framework for increased investment, innovation, growth in exports and British job creation,” says Malcolm Webb, chief executive of Oil and Gas UK. “Unlocking the total economic potential of the UKCS will require both the industry and government to play their respective parts to the full.”

By Victoria McDonnell

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