Rise in employment hand-in-hand with skills shortage, says Chamber survey

More than a third of contractors reported recruitment difficulties,
A worker uses machinery to handle oil pipes at the turntable on a drilling rig, operated by Rosneft PJSC, in the Samotlor oilfield near Nizhnevartovsk, Russia, on Tuesday, March 21, 2017. Photographer: Andrey Rudakov/Bloomberg

A looming skills shortage in the north-east oil and gas sector has been highlighted in the latest industry survey from the Aberdeen and Grampian Chamber of Commerce (AGCC).

More than a third of contractors are having difficulty recruiting technical staff following the “deep cuts” of the recent industry downturn, according to the study.

The research shows confidence is largely returning to the UK sector but also reports concerns about a potential “skills shortage” as activity picks up.

Around a third of oil and gas firms are seeking to increase their workforce by 10% or more next year.

A total of 37% of contractors reported difficulty in recruiting technical staff, 25% said it was difficult to find workers for managerial positions and 27% reported the same issue for skilled trade staff.

Only 5% of oil and gas companies think Brexit will have a positive impact on the UK continental shelf.

The study, carried out along with the Fraser of Allander Institute and KPMG, said it comes amid “talented and qualified individuals leaving the industry and perhaps unwilling to return”.

Meanwhile, many firms have increased workers’ pay due to a shortage of skills and in a bid to retain their core staff.

As employment drives pick up, 44% of contractors are now working at optimum levels – the highest since 2014.

Russell Borthwick, chief executive AGCC

Russell Borthwick, chief executive of the AGCC, said the results pose challenges for the sector going forward.

He said: “I think this is probably one of the most positive survey sets of results that we have seen for some time. That’s got to be good news for the future of the region.

“With that comes some health warning around the fact that, as employment levels grow, do we have access to the right skills in terms of volume and specific requirements? Is there a risk that we might slip back in to a culture of buying the best people?

“It’s important that the operators and the supply chain work together to make sure that we don’t slip back into that way of working.

“Perhaps the cuts that we made were necessary but they were also very deep.

“The challenge in the future is if there’s upward pressure on salary and people costs it’s important that operators are mindful on introducing new technologies to counterbalance that and make sure the cost of oil recovery doesn’t go up.”

Other findings were that, despite collaboration being a buzzword for the sector amid the downturn, just 31% of firms reported an improvement for companies working together in the last three years.

Meanwhile, Mr Borthwick cautioned that, as more work comes back to the UK, companies cannot lose their international focus.

He added: “I think perhaps there is a slight risk that as additional work becomes available in the UK that some contractors may decide to fill their order books with work closer to home which might take away from the international focus.

“That could be harmful in the long term.”

Moray Barber, partner at KPMG, said: “Despite a recent reduction in the oil price, the relative stability of recent months is driving a more positive sentiment, and it’s hugely positive to see business confidence amongst contractors improve further on the already high levels witnessed over the past two years, and that optimism for the future outlook of the sector is high.

“The price of oil is driving a more positive sentiment across the industry, but the survey does highlight the importance of retaining our best people and ensuring that the next generation of talent has the right type of skills for the coming energy transition. We need to be asking where the next generation of talent is going to come from, what skills do they really need, and what are we doing in industry and academia to ensure we have enough people to help sustain that headcount growth?

“Overall, this survey tells us that change is afoot and the direction of travel is positive, but there continue to be potential traps along the way, not least the impact of Brexit, a potential impending skills gap and environmental and climate change risk. We believe the industry is alive to these challenges as we are seeing our clients develop growth strategies and scenario planning to deal with the risks these present, as well as driving forward their technology and innovation agenda to become disruptors in their own right.”