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The UK offshore energy workforce is set to shed tens of thousands of jobs in the next five years as the transition to low-carbon production fails to attract investment worth hundreds of billions.
UK jobs being created by the energy transition “is not the trajectory we’re on”, but government has access to the “levers” to change that, said Professor Paul de Leeuw.
Robert Gordon University’s director of Energy Transition Institute, de Leeuw, and principal project manager, Sumin Kim, have released the latest in a series of reports on energy industry employment in the UK . It has warned of mass job cuts if the decline of oil and gas and the rollout of renewable energy projects are not managed effectively.
© HEMEDIAIf managed poorly, the transition to renewables could result in the offshore workforce shrinking from 154,000 in 2024 to 125,000 in 2030. However, under the best-case scenario forecast by the ‘Striking the Balance’ report, headcount in the offshore industry taking in oil, gas and renewables could jump as high as 212,000.
With operators and supply chain bemoaning the uncertainty facing oil and gas operations in the UK and the hostile tax regime that has led firms to rethink global portfolios or, in some extreme cases, exit the basin, de Leeuw has called for a strategic rethink.
“The prize is there,” said the RGU professor, “at the moment, that is not the trajectory we’re on.”
A ‘full industrial strategy’ is needed, says RGU
The oil and gas workforce shed 5,000 jobs in 2024, slumping to 115,000, RGU has found. However, in 2024 the renewables sector also expanded by around 5,000 jobs.
This will accelerate. Under RGU’s most ambitious forecast for continued oil and gas production in the UK, there will be 71,000 employed in the sector by 2030 and 48,000 by 2035 – to achieve these production levels need to be at 0.7 million barrels of oil equivalent per day (mmboe/d) and 0.5 respectively.
For context, production stood at 1.09 mmboe/d in 2024.
De Leeuw called for a “full industrial strategy” from government by supporting oil and gas production to manage the transition and ensure that the ramping up of clean energy source can meet the decline in oil and gas and as a result expand the number of jobs in the industry.
© Supplied by ShutterstockHe explained that “government doesn’t make investment happen,” but it can “provide policy framework and a support framework”.
The Energy Transition Institute director added: “It is very hard for the government to make the renewables agenda go faster, but what they can do is they have all the levers of how to manage decline in oil and gas and particularly around what they do with the tax regime and the fiscal levers.”
He said that the Labour government can “pull the levers” to support investment in oil and gas and manage a more even transition that would create jobs for those currently working in hydrocarbons to move to under renewables.
There is £240bn in investment ‘sitting in board rooms still subject to support’
To support the sector, investment must be delivered into the UK’s energy industry, both in renewables and oil and gas.
To achieve the best-case scenario for investment and job creation modelled by RGU, £350 billion needs to be spent in the UK. Currently, £110bn – less than a third – has been approved.
However, he warned current trajectory for investment means UK employment in the energy sector is set to be at the lower end of the report’s estimates.
“There’s almost £240 billion of monies still to be approved, sitting in board rooms still subject to support, and that has a big impact because if that money doesn’t get approved the workforce rate is more likely to [be between] 125,000 and 163,000,” de Leeuw explained.
“There’s a real issue here if you follow the money, if you look at what is currently happening, what the confidence is in the industry, we are far more heading towards this area as you can see in our report, than the big prize of full industrial strategy.”
He said that the “big element” is unlocking the unspent funds by “giving confidence back to the industry”.
The RGU scholar added that the renewed government focus on renewable ambitions, and the recently closed consultations on the future of oil and gas licencing and taxation are “critical” to delivering the level of investment needed.
Aberdeen and Aberdeenshire stand to take a hit
The north-east of Scotland stands is particularly at risk due to the number of jobs with operators, contractors and supply chain within the region.
RGU found that one in six jobs in Aberdeen and Aberdeenshire are tied to offshore energy, a jump from Scotland’s figure of one in 30 and a significant leap from the UK’s one in 220.
Current trends within offshore wind raise a few eyebrows at the prospects of Scotland’s workforce.
RGU found that 80% of the UK’s “offshore wind and cluster projects in construction/installation (by GW) between 2025 and 2030 forecast to be outside Scotland”.
© Shutterstock / Wirestock CreatorAs a result, Scotland needs to deliver oil and gas work to maintain workforce figures while ScotWind and INTOG projects are delivered in the early 2030s.
“But of course, people need a job. They need to pay the mortgage, they need to pay the bills,” he said.
“They can’t wait for that [2030 wind projects], so, there’s a real challenge when you look at this picture around how you sustain the capacity and the capability in the country.”
The answer is “you might need to sustain select activities in Scotland to make sure you keep your world class supply chain and the workforce here because without that, you cannot accelerate anymore,” de Leeuw added.
Local content
To expand the UK workforce and deliver the potential job growth outlined in RGU’s most ambitious forecast, local content needs to be delivered for renewables projects.
The latest report explained: “For the UK to realise the future scenarios outlined in this report, the nation will need to manufacture more of its wind turbines and associated infrastructure, instead of importing most parts from overseas.”
De Leeuw said that “We need to build factories, we need to build the infrastructure in the UK”.
He added that organisations like the newly established Great British Energy – which is set to be headquartered in Abeerdeen – and the National Wealth Fund will be needed as they invest in “new capacity capability”. This will be “key because if we can’t place the contracts here, the vast majority of contract will be placed externally”.
© Supplied by LinkedInWithout investment in UK supply chain capabilities, any job benefits in the UK economy will be temporary. “All we will see here is temporary jobs here, maybe some operating jobs, but the vast majority of supply chain and operating jobs will actually go to other countries,” the Energy Transition Institute director explained, which is “not the outcome I think anybody wants for the UK”.
However, one of the reasons why the UK has not seen such factories delivered already is high energy and labour costs, compared to locations that do manufacture the infrastructure that has been and will continue to be deployed in country’s waters.
When questioned on this, the former BP manager answered: “I think there is a big lesson to be learned from what we’ve done in the oil and gas industry and all the big equipment is getting built in Middle East, Far East, and other places that get imported here.
