120,000 oil and gas jobs ‘will be lost in two years’
BRITAIN’S oil and gas industry will lose more than 120,000 jobs in two years following the plunge in the price of oil, new research suggests.
Jobs supported by the sector will have dropped by more than a quarter at the end of this year, compared to a peak of 450,000 in 2014, according to industry trade body Oil and Gas UK.
Its latest figures show employment was slashed by about 84,000 to 370,000 last year and that a further 40,000 jobs are likely to be cut in 2016. That will leave the total number of jobs supported by the sector at around 330,000 at the close of this year.
The gloomy update comes as North Sea operators and supply chain companies continue to make swingeing cuts in an effort to drive down costs since the price of oil plummeted from its peak of around $115 in 2015. Brent crude is currently $51 a barrel.
Oil and Gas UK chief executive Deirdre Michie said: ‘The industry has been spending more than it is earning since the oil price slump towards the end of 2014. This is not sustainable and companies have been faced with some very difficult decisions.
‘To survive, the industry has had no choice but to improve its performance. It is looking to find efficiencies to restore competitiveness, to attract investment and stimulate activity in the North Sea. With up to 20 billion barrels of oil and gas still to recover, this region is still very much open for business.’
The research, by Experian, comes as the number of exploration and appraisal wells set to be drilled this year is expected to be less than half that in 2015, according to Oil and Gas UK. It added that more than 20 per cent of the oil fields on the UK Continental Shelf are currently operating at a higher unit cost than the current oil price.
A separate study by Bank of Scotland revealed a third of the UK’s oil and gas firms are planning further job cuts this year as a result of the price slump. The bank’s latest report on the industry found 43 per cent of companies are planning further costcutting measures, while 32 per cent are planning to shed jobs.
Mrs Michie said 330,000 jobs was ‘still a significant number, but the total employment we will sustainably provide depends on the level of investment attracted into the basin’.
She added: ‘If investment falls, then so will jobs. The interventions we make now will be critical to shape the
‘Interventions now will be crucial’
industry’s direction and help stem future losses.’
A Scottish Government spokesman said: ‘While oil prices have been recovering from their previous low levels and there is some improvement in investor sentiment, this remains a challenging time for the industry and the workforce, as these latest figures show. We are engaging closely with the industry, trade unions and regulator to overcome the current challenges to ensure a long-term future for the sector.
‘We are focused on creating a competitive and supportive business environment and promoting innovation throughout the supply chain. However, it is the UK Government that retains control of the key taxation levers affecting the sector and it must take the action needed to incentivise investment to protect jobs.’