Scotland business

Oil and gas sector 'remains upbeat'

oil platform
Image caption The survey found although there was optimism in the UK, confidence was higher in international markets

Oil and gas firms have reported increased optimism, according to the latest survey by Aberdeen & Grampian Chamber of Commerce (AGCC).

However the report has highlighted concerns among the industry caused by an unexpected rise in tax introduced in the 2011 budget.

The AGCC study found that the oil and gas sector continued to outperform the rest of the Scottish economy.

Demand for staff has increased especially among larger firms.

This study is the 16th in the series which began in 2004.

It found increasing activity with the outlook for the UK Continental Shelf (UKCS) "positive", however confidence was higher in international markets.

There were more signs of merger and acquisition activity which is generally regarded as a sign of the health of an industry.

But the report said there was a "lingering impact" of the unexpected tax hike announced in the 2011 UK budget, with perceptions "as to the potential instability of the UK's fiscal regime".

However tax breaks for investment announced in the 2012 budget contributed "towards more positive views within the industry as to possible future developments".

For the first time the survey asked about a planned independence referendum in Scotland in 2014 and its possible consequences.

Although more than a third said it was "a factor in future plans and investment proposals", the study concluded the responses to the questions were "inconclusive" and the plan is to investigate the issue further in future surveys.

Skills shortage

The industry identified a skills shortage in the first of these bi-annual surveys and eight years later it seems little has changed.

Although the research has highlighted "commendable" efforts to address the shortage, it warned nothing would be resolved if companies continued to recruit staff from each other rather than "increasing the pool of experience and expertise".

A concern was also expressed that skilled workers would leave the UK in order to work abroad.

The report has recommended a joint effort to produce and retain skilled staff.

Robert Collier, chief executive of Aberdeen & Grampian Chamber of Commerce, said: "The oil and gas sector has helped ensure Aberdeen City and Shire has remained largely sheltered from the current economic downturn facing the rest of the UK and its importance to the region cannot be underestimated.

"Optimism in the sector is strong and the overall outlook is good, but this will only be realised if the right environment is put in place to allow the sector to flourish by removing the barriers to growth and building policy stability."

European Control

Proposals which would allow the European Commission to take control of North Sea health and safety could be like "setting a ticking time bomb" according to the energy lawyer Bond Pearce which sponsored the survey.

The proposal came in the wake of the Macondo tragedy in the Gulf of Mexico

Paul Stockley, of Bond Pearce, said: "There is significant unease about the possibility of the European Commission taking over regulation of offshore oil and gas safety, which we believe could be a dangerous mistake.

"The UK, post Piper Alpha, has demonstrated that it has the strongest and most robust regime globally."

Falklands visit

Meanwhile a 35-strong team from the Falklands Islands Chamber of Commerce is visiting Aberdeen and Shetland Islands this week.

It has been organised by the energy lawyers Pinsent Masons to explore business opportunities for north east firms in the South Atlantic.

Gavin Farquhar, a partner in Pinsent Masons, has been doing business in the Falkland Islands for nearly 25 years and believes north east businesses have a lot to offer.

Mr Farquhar said: "This visit is by private Falkland businesses which are keen to learn lessons and develop mutually beneficial contacts with two regions where oil and gas has been discovered and successfully developed.

"There is bags of experience available in both Aberdeen and Shetland and the Falklands delegation will be able to hear how the UK oil and gas industry developed at pace.

"There is also great potential for Aberdeen businesses to supply technologies and specialist skills if the Falklands emerge as a major hydrocarbon basin."

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