About one in five British oil and gas companies expect to cut more jobs in 2021 after a bruising year for the sector in which half of contractors said their workforce had declined, according to a survey.
The figures from research by Aberdeen and Grampian Chamber of Commerce in partnership with the Fraser of Allander Institute and KPMG cast new light on the problems being faced by the UK’s North Sea industry.
The study found 22% of contractors laid off more than 10% of their workforce in 2020.
While not as bad as the downturn in 2016, caused by a cratering oil price, the decline is significant for the companies and the basin.
More than three-quarters of the firms surveyed said they had tapped into some form of government support during the pandemic, with many of those taking advantage of the furlough scheme.
Shane Taylor, of Aberdeen and Grampian Chamber of Commerce, said: “Although government support has had clear value in supporting firms and jobs through this challenging period of suppressed demand, the only sustainable way to give businesses and workers clarity is a clear route to heightened levels of activity in the future.”
Earlier this year, the price of a barrel of oil dropped to levels not seen in more than two decades.
Brent crude, the standard most commonly referred to in the UK, briefly dipped below 19 dollars.
The decline was caused in part by an argument between Saudi Arabia and Russia, two of the world’s three biggest oil producers, which increased production and flooded the market.
Meanwhile, demand fell because of the pandemic.
Brent has since recovered somewhat and is trading at around 46 dollars per barrel.
The survey, which asked 100 companies for their opinions, also found 23% were not at all optimistic about the future of Aberdeen as an energy hub, while a further 27% were only slightly optimistic.
In last year’s survey, only 9% of companies reported not being at all optimistic.
North Sea companies are concerned about an uncertain future as the UK is slowly putting itself on a course to drastically reduce emissions.
The UK Government has set a target that the country will have net-zero emissions by the middle of the century.
But experts say there can still be a role for the offshore oil and gas industry in this new world, which will require major investment in offshore wind, among other things.
“The declining trend in the positive outlook for the future of the Aberdeen city region as an energy hub also emphasises the need to see rapid progress in some of the key projects which will underpin the region’s ability to transition successfully, such as the Energy Transition Zone,” Mr Taylor said.
He said the expertise and skills in the communities that power offshore oil and gas can be “key contributors” on the road to net-zero.