The oil & gas sector could create up to 39,000 new jobs in the UK over the course of the next two years according to new research from Bank of Scotland.
A survey of a broad cross section of 100 UK oil & gas companies, carried out for the Bank of Scotland’s third-annual report on the sector, suggests expectations of job creation have increased by 5,000 since last year – when it was expected the sector would deliver 34,000 new jobs.
Stuart White, Bank of Scotland Commercial area director said:
“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 – but other parts of the UK will benefit from expansion plans.”
Confidence remains high among a majority of (69%) of UK’s oil & gas executives about their growth prospects in 2014/2015. However this is slightly down on the 77% who predicted growth last year.
Concerns around talent in the sector have also grown, with 38% naming a shortage of skills as the greatest challenge they’ll face in the same period, up from one-third (33%) last year. The availability of skilled workers was the most challenging for engineering companies (87%) while just one in five (20%) in exploration and production felt it was an issue.
International expansion was a priority for 64% of those asked, up 5% on last year’s results. Africa is the priority market for future investment with over a fifth (21%) targeting growth there while North America 17% and the Middle East 18% also remained key areas for investment.
With international income accounting for 44% of turnover, almost half (46%) of exploration and production companies said they were already planning further growth in foreign markets in the next 24 months.
When asked about diversification, nearly half of all companies (48%) were moderately to intensely interested in onshore shale gas, while nearly two-fifths (38%) had the same degree of interest in funding solutions for decommissioning activities. More than a third (36%) also said they were interested in diversifying into renewables.
The Bank of Scotland’s Commercial area director added: “The findings of this report are excellent news for the economy – demonstrating the employment generating nature of the oil and gas industry now and in the future.
“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.
“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. With 44% of income already generated internationally, this is not a new trend, and reflects the reach UK firms have as the industry benefits from the expertise gained in the challenging North Sea environment.
“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.”
Field research for this report was undertaken between 20 February – 6 March 2014 by the UK’s largest independent market research consultancy – BDRC Continental.