About one in five British oil and gas firms expect to cut more jobs in 2021 after a bruising year for the sector in which half of contractors said their workforce had declined, according to a survey.
The research by Aberdeen and Grampian Chamber of Commerce, in partnership with the Fraser of Allander Institute and KPMG, casts new light on the problems being faced by the UK’s North Sea industry.
It found 22% of contractors laid off more than 10% of their staff in 2020.
While not as bad as the downturn of 2016, the decline is significant for the companies and the basin.
More than three-quarters of the firms surveyed said they had tapped into government support during the pandemic, with many taking advantage of the furlough scheme.
Shane Taylor, of Aberdeen and Grampian Chamber of Commerce, said: “Although government support has had clear value in supporting firms and jobs, the only sustainable way to give businesses and workers clarity is a clear route to heightened levels of activity in the future.”
Earlier this year, a barrel of Brent crude, the standard most commonly referred to in the UK, briefly dipped below $19 – its lowest point in two decades.
The decline was caused in part by an argument between major oil producers Saudi Arabia and Russia, who flooded the market. Then demand fell due to the pandemic.
Brent has since seen a recovery and is now about $46 per barrel.
Martin Findlay, senior partner at KPMG in Aberdeen, said: “From the significant oil price decline, which started earlier in the year, to a global pandemic, and localised lockdown in Aberdeen, the oil and gas industry has, once again, endured profound challenge and uncertainty. However, there is room for some optimism. The industry, unlike so many others, is incredibly resilient and frequently deals with instability and challenge.”
The survey, which asked 100 companies for their opinions, also found 23% were not at all optimistic about the future of Aberdeen as an energy hub, while a further 27% were only slightly optimistic.
In last year’s survey, only 9% of companies were not at all optimistic.
North Sea companies fear an uncertain future as the UK itself is on a course for drastic emissions cuts.
The UK Government has set a net-zero emission target by the middle of the century, but experts say there can still be a role for the offshore oil and gas industry in this new world, which will require major investment in offshore wind, among other things.