Almost 40,000 new jobs could be created in the oil and gas industry over the next two years, new research from the Bank of Scotland has found.
The bank’s third annual oil and gas report prepared using findings from a survey of 100 UK sector firms reveals employment expectations in the sector are more buoyant than last year, having risen by 15% to 39,000.
But it also shows how confidence about prospects has slipped amongst executives, with only 69% of those canvassed saying they expect growth this year compared to 77% last time.
The biggest concern remains talent, with 38% of respondents highlighting a continuing skills shortage as the greatest challenge firms are likely to face. And faith in the ability of new recruits has continued to wane, with the measure climbing 6% on last year’s study.
Bank of Scotland commercial director Stuart White said the findings were “excellent news”, demonstrating how the sector would continue to create employment with action now underway to address training needs.
“With most of the UK’s oil and gas firms clustered in Aberdeen and the North-east, Scotland should reap the largest share of these new jobs, however other parts of the UK will benefit from expansion plans,” he said.
“The report also highlights the growing challenges posed by the lack of a skilled workforce. Positive action is underway to address this shortfall, with new partnerships between higher education institutions and industry as well as the creation of new specialist apprenticeship schemes.”
International expansion is an increasing priority for more than 60%, with Africa now the priority market and alongside key investment areas in North America and the Middle East.
The survey also suggests that 44% of revenues in the sector come from global operations, while almost half the responding exploration and production companies said they were already targeting further growth abroad over the next 24 months. Overall, 42% said they believed new international markets offer the biggest opportunity for the UK’s oil and gas industry, but a tenth reported challenging access to these growth areas.
Meanwhile, 48% of firms described themselves as interested in exploring an opportunity in onshore shale and unconventional gas.
Around two-fifths had the same degree of interest in funding solutions for decommissioning an area of the industry identified as a priority earlier this week, with warnings that cost-cutting and partnership are required if the sector is to capitalise on a market which could be worth £35bn. A similar number of firms said they were interest in diversifying into renewables markets.
Mr White said the international focus reflected the “reach” of UK specialists given expertise gained in the challenging North Sea environment and declining stocks on the UK continental shelf.
“The results also demonstrate the global nature of the industry as more firms look to expand internationally and tap into the markets with the largest levels of recoverable reserves,” he said.
“Our client base mirrors this trend. We have seen a significant increase in our support to the industry in recent years to facilitate international expansion and we expect this trend to continue.”