Resurgent North Sea firms boost R&D spending amid expected earnings rise

● Investment in innovation hits 12-year high as confidence continues to grow

The oil and gas sector is investing in innovation at its highest level for more than a decade, as the majority of firms forecast rising profits in 2019, new research suggests.

In contrast to the wider UK economy, Nor th S ea op erators and contractors are bucking the trend and investing in staff, research and develop - ment (R&D), technology and new markets to support continued growth, according to the 30th Oil and Gas Survey.

The industry report revealed that the proportion of firms upping their R&D spending hit a high not seen since 200607.

Almost half (47 percent) of contractors reported that they have either started to use artificial intelligence or will begin to do so in the next five years, while 45 per cent have increased investment in the UK Continental Shelf (UKCS) during the past 12 months.

Close to three-quarters (72 per cent) of companies fore - cast a rise in profits this year.

For the first time since the oil and gas sector downturn five years ago, confidence levels are consistently rising across licence holders, operators and the supply chain.

In particular, the share of contractors working at, or above, optimum levels in their UKCS operations is at 49 per cent, a five-year high.

Nine out of ten firms are now optimistic about the long-term future of the Aberdeen city region as an energy hub.

The survey, conducted by Aberdeen & Grampian Chamber of Commerce in partnership with the Fraser of Allander Institute a nd KPMG UK, found that 40 per cent of firms have increased their total workforce in the last year.

It also reported a ne tb alance of 52 per cent expect to up their spend in staff training between now and 2021.

Shane Taylor, research and policy manager at Aberdeen &Grampian Chamber of Commerce, said: “Our survey paints a picture of an optimistic industry, investing to deliver the opportunity of a productive UKCS and a vibrant future for Aberdeen as an all energy hub. There’s an incredible opportunity for Aberdeen to leverage its reputation in oil and gas and lead the energy transition.”

He cited recent projects, such as the launch of the National De commissioning C entre, as “powerful statements of intent” to become a global leader in the transition.

Mo ray Barber, partner at K PM G, added :“The report tells us that there has been investment pickup but we need to be cognisant of the fact that this is starting from a relatively low base from the challenging times the industry was facing four or five years ago.”

hannah.burley@jpimedia.co.uk