RECOVERY MODE

North Sea job cuts are starting to slow and energy firms are “cautiously optimistic” about renewed expansion, an influential new report says today.

More than half of oil and gas firms are planning for growth even though they say the slide in the pound and higher resulting costs remain “challenges” for the sector, notes the sixth annual Bank of Scotland Oil & Gas Report.

The report, which gathers views from across the industry and its supply chain, found that business confidence has grown in the last year, with the net balance of firms that feel optimistic surging to 39 per cent. That is up from a positive balance of just 2 per cent in 2016.

Despite continued low oil prices, growth is also on the agenda for more than half (58 per cent) of companies. The firms anticipating growth said they expect, on average, growth of 26 per cent of their current annual turnover in the next 12 months, up from the 49 per cent who expected an average of 17 per cent growth in the 2016 survey.

Looking ahead to the next

0 The weakness of sterling and input costs still challenge the industry

PAUL DE LEEUW 12 months, firms said they are looking to expand by generating organic growth (27 per cent), diversifying operations (22 per cent) and through mergers and acquisitions (9 per cent).

Stuart White, Bank of Scotland regional director, mid markets, north of Scotland, said: “While the blow from depressed oil prices has been severe for the many businesses and individuals impacted by job losses, the oil and gas sector is proving itself to be among one of the most resilient in the UK. The expression of confidence in this year’s survey reflects an industry that appears to be turning a corner, with conditions for growth more favourable than they have been in recent times.”

Amid continuing macroeconomic headwinds and a supply glut, the oil price yesterday fell 1.5 per cent to $46.08 a barrel. That compares with more than $100 a barrel in the summer of 2014, since when the oil and gas industry has mothballed

“It is encouraging to see that many companies are looking again at returning to profit and recruiting new staff”