A total of 110,000 UK jobs in the N. Sea oil and gas industry have been lost as a result of the global slump since crude oil prices hit a 13-year peak of over $110-barrel in June 2014.
And industry chiefs reckon another 10,000 jobs will be lost by the end of 2016.
As the chart below shows, in 2013, a total of 440,900 people in the UK were directly and/or indirectly employed (in the supply chain). To date, this has slumped to 330,400 this month, in new figures published today by Oil and Gas UK.
Employment in the UK offshore oil and gas industry
The above figures contain revised estimates for previous years using both the latest available data collected by Oil & Gas UK and latest published data by the Office for National Statistics. These job losses are across the whole country and cover:
- Direct employment provided by companies involved in the extraction of crude oil and natural gas and supply chain companies who directly support this activity
- Indirect employment across the extensive supply chain which also exports goods and services overseas
- Induced employment created by the sector’s spending in the wider economy, such as in hotels, restaurants and taxis
- Brent crude is currently trading at around $50 a barrel, less than half the price it was in 2014 when jobs linked to the sector peaked at over 450,000.
Jobs across the UK supported fell by an estimated 84,000 to around 370,000 in 2015, and are forecast to have fallen a further 40,000 by the end of this year.
The Scottish Government estimates that there have been more than 10,000 redundancies in Scotland – mostly in the Grampian region – because of the N. Sea slump.
Deirdre Michie, Chief Executive, Oil & Gas UK, said: “We cannot underestimate the impact the global downturn in the industry is having on the UK economy, nor the personal toll on those who have lost their jobs, and the effect on their families and colleagues.
“The industry has been spending more than it is earning since the oil price slump towards the end of 2014. This is not sustainable and companies have been faced with some very difficult decisions.
“To survive, the industry has no choice but to improve its performance. It is looking to find efficiencies to restore competitiveness, to attract investment and stimulate activity in the North Sea.
“With up to 20 billion barrels of oil and gas still to recover, this region is still very much open for business but the total employment the N. Sea will sustainably provide depends on the level of investment attracted into the basin. If investment falls, then so will jobs.
“Competitiveness is improving as a result of the work the sector is doing in this area – and is being reflected in the reduction in unit operating costs from almost $30 a barrel in 2015 to around $17 this year. But to protect our industry and the skilled jobs it provides we need to see further efficiencies.”
Jackie Baillie, MSP, the energy spokesman for the Labour Party in Scotland, commented: “These are stark figures which underline the scale of the oil jobs crisis.
“We need both short and long term responses to this crisis. Labour has called for a public agency to protect strategic investments.
“In the short term we need to support workers. The SNP’s flagship training fund has not delivered anywhere near enough support.
“The SNP ignored the oil jobs crisis for months because it was politically embarrassing for them. We need to see much more regular reporting of the impact of the changing oil price on jobs and the economy. “
The big challenges facing oil and gas sector
- Over 20% of oil fields in the N. Sea are operating at a higher unit cost than the prevailing oil price of around $50-barrel
- The number of exploration and appraisal wells drilled in 2016 could be less than half the number drilled in 2015
- Less than £1 billion of fresh capital is expected to be invested in 2016 – one eighth of the average over the last five years
- The number of fields expected to cease production between 2015 and 2020 has risen by one fifth to over 100.