Scottish energy services firm Wood Group PSN has confirmed it is cutting pay rates to UK-based contractors by 10%.
The brownfield production services business said it was making the change in response to cost and resourcing challenges affecting the UK North Sea oil and gas sector.
Dave Stewart, WGPSN’s UK managing director, said: “A rate review showed us that, over the last five years, contractors’ rates have risen three times more than staff rates.
“We need to control costs for our clients and focus on increasing our staff ratio.
“Escalating contractors’ rates are driving industry costs up, which inhibits investment, growth and long-term sustainability.
“The UK oil and gas sector’s operating costs rose 15.5% last year to a record $14.8 billion, with the number of fields with opex costs of more than $50 boe doubling during 2013.
“We don’t believe this is sustainable, and we need to control costs to help maximise economic recovery and to safeguard the future of the North Sea.
“The Wood Review has been a catalyst for many of these discussions.
“Companies have an increasing focus on capital efficiency, and we must seek opportunities to work more innovatively to assist our clients with this.
“The North Sea is a relatively mature sector and we believe this kind of decision isn’t optional, it’s necessary.
“We have to better manage costs and focus on developing employees, in order to create job security for future generations.”
The company, which employs 12,000 staff in the UK, will implement the rate change on June 1.