PwC: Action must be taken to extend the life of North Sea

Wednesday 2 April 2014

The North Sea is a key recruitment area for limited company contractors in the oil and gas sector, but unless action is taken to secure its future, this may not always remain the case, according to a new report.

'Northern lights: One vision, one strategy' from PwC argues that the industry needs to reduce costs by billions of pounds to remain competitive and extend the life of the North Sea.

"The UK North Sea is at a defining moment in its history," Kevin Reynard, Aberdeen office senior partner, explained in the report.

"Declining production levels, decommissioning and rising costs are all fuelling uncertainty. This uncertainty threatens to destabilise the future of the oil and gas industry and is borne out by a number of recent project delays and postponements, as well as declining levels of exploration."

To strengthen the North Sea sector, PwC claims political and fiscal uncertainty must be overcome to ensure stability, while new business models and solutions should be explored.

The body has also called on the industry to define how costs can be lowered and performance can be improved to increase production.

PwC adds that "must-have technological advances" have to be supported in order to encourage innovation.

Another barrier threatening the future of the North Sea, both in terms of production and jobs, is the creation of silos. PwC claims the industry must work together in order to more effectively plan and grow.

An integrated strategy would help to attract investment, improve asset management and ensure decommissioning can be done effectively.

"By collaborating under one cohesive vision to develop vital skills, innovation, infrastructure and technology, we have an unprecedented opportunity to build a thriving future," Mr Reynard wrote.

PwC is confident that Aberdeen and the North Sea can do what is necessary to secure its future and maximise the benefits of the economic recovery.

However, this will require that the skills shortage is addressed - something contractors can certainly help with.

The report also recommends outsourcing less critical, non-core functions away from Aberdeen, finding efficient and innovative ways of working with the same number of people, and retaining existing staff through personal development.

Furthermore, by investing in the latest automation technologies, companies can get rid of certain labour-intensive tasks.

Coaching will also help to address the gap between experienced workers and future leaders. When on-site, contractors are certainly in a position to share their skills and educate others. Not only will this help to address the talent shortage but it will ensure independent professionals have a strong team around them when on a placement to perform their job to the best of their ability.

However, businesses in the North Sea also have to commit to improving things by investing in leadership at the front line. According to PwC, this will ensure engineers are turned into "even greater people managers who will positively impact productivity and safe working".

Companies also need to innovate to be competitive employers. The report claims this will require "greater discipline and structures in growing talent from within and a clearer focus on accessing new people from outside the sector".

By Victoria McDonnell

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