We at Oil & Gas UK recognise that there will be changes in employment patterns, and these will affect employment across the sector.
It is worth pointing out the 9% decline in employment will be across the UK – not just Aberdeen or Scotland.
The forecast reduction in oil and gas industry jobs comes from an anticipated decline in capital expenditure over the next five years.
However the survey does also forecast that, from the current workforce, 38,000 full time equivalent employees will be retiring. It means we have a net need for 12,000 new entrants in the industry to fill those vacancies.
This report does highlight to Oil & Gas UK the need for three areas to be turned around very quickly to ensure the future of this industry, the first one being fiscal reform.
We had some great news from Danny Alexander last week and in the Autumn statement that the government seems to be starting to ‘get it’.
On the regulatory reform side of things, we are waiting with baited breath for the new Oil and Gas Authority (OGA) to be up and running.
It is happening more slowly than we had hoped. But Andy Samuel, the new chief executive, will be a strong person to lead the authority and we hope it will bring about the regulatory reform that a mature basin like the UKCS desperately needs.
The third aspect is getting ahold of spiralling costs in the North Sea. Oil & Gas UK is looking at a number of efficiency drivers that will in turn will give rise to reduced cost in the basin, which is key.
If you look at the UKCS in comparison to the Norwegian Continental shelf or the Netherlands, our costs since 2011 have been much, much, higher. We certainly need to find a way to get a handle on costs.
Almost 43 billion barrels of oil and gas have been extracted from the North Sea, and with potentially some 24 billion still to come, this industry will continue to provide careers here in the UK for many decades to come.
As one of the most expensive offshore basins globally, with development costs per barrel having increased five times over in the last ten years, this report couldn’t have come at a more crucial time for the sector and we believe its guidance will prove invaluable in setting the skills agenda for the sector.
Stephen Marcos Jones is a business development director of Oil & Gas UK