Scotland

Oil job losses 'worse than expected'

oil platform Image copyright PA

The number of job losses in the UK oil and gas sector was worse than expected last year, a major report has said.

Trade body Oil & Gas UK's annual report said 60,000 direct and indirect jobs were lost across the industry in 2016, more than the 40,000 it had predicted.

The report said the sector could lose another 13,000 jobs in 2017.

However, it suggests that while some companies are still reducing headcount "the largest reductions may now be behind us".

The oil and gas industry still supports more than 300,000 jobs across the UK but that is 150,000 less than the peak in 2014, the report said.

Image copyright Maersk Oil
Image caption The trade body believes confidence is starting to return to the sector

According to the trade body report: "There are tentative signs that investor confidence is starting to return to the sector.

It highlights the fact that almost $6bn (£4.6bn) was invested in UK continental shelf assets and acquisitions in the first half of 2017.

"More needs to be done to drive any upturn and secure long-term employment," the report says.

"Up to £40bn worth of potential investment opportunities currently sit in company business plans."

Figures in the report break down employment in UK offshore oil and gas into three types:.

  • Direct employment - provided by companies involved in the extraction of crude oil and natural gas and supply chain companies who directly support this activity
  • Indirect employment across the extensive supply chain which also exports goods and services overseas
  • Induced jobs created by the sector's spending in the wider economy, such as in hotels, catering and taxis

It said there were 28,300 people employed in direct oil and gas activities, down from 41,300 in 2014.

Indirect jobs fell from 206,100 to 141,900, the report said, and induced employment dropped from 216,500 in 2014 to 132,000 this year.

According to the report, the current low level of exploration activity "remains a serious concern" as it is vital to replenish production with new development opportunities.

Elsewhere in the report, Oil & Gas UK modelled scenarios for the impact of Brexit on tariffs for the oil and gas industry.

The report said Brexit could cost the industry £1.1bn a year if the UK was unable to negotiate new trade deals and reverted to WTO rules.

It said this would be an "unhelpful" additional cost.

Oil & Gas UK chief executive Deirdre Michie said: "There are still serious issues facing our industry which has suffered heavy job losses since the oil price slump. But we are hopeful that the tide is turning and expect employment levels to stabilise if activity picks up."

She added: "Despite our difficulties, we've got more reasons to be positive and some great stories to tell that demonstrate the real progress that we are now making."

Ms Michie said the sector was successfully re-positioning itself through efficiency and cost improvements.

"Although we are getting to a much better place, we still need further investment to generate new activity and sustain hundreds of thousands of UK jobs," she said.

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