Engineering news
The 26th Oil and Gas survey, conducted by Aberdeen & Grampian Chamber of Commerce, revealed that 38% of contractors surveyed are more confident about business on the UKCS, compared to just 10% who are less confident.
This is a notable rise from historic lows six months ago when only 12% of contractors were more confident and 47% were less confident. However, 52% report no change in their outlook, indicating that significant challenges still remain in the marketplace.
“It is heartening to see that as the industry continues to tackle the downturn by focusing on improving its competitiveness, confidence in some companies is rising,” Oil & Gas UK’s chief executive Deirdre Michie told Professional Engineering. “This mood of cautious optimism was evident at our Oil and Gas Industry conference.”
The study found more than half (52%) of contractors and operators/licensees believe that the sector has already reached the bottom of the current cycle and 26% consider it will do within the next year. When asked what position businesses expect to be in by 1 January 2018, 42% expect their business to be growing, up from 16% who expected to be growing by January 1, 2017, while only 2% anticipate further decline.
In addition, contractors’ investment spend is moving in a positive direction with more contractors anticipating to increase investment over the next two years (26%) rather than reduce (19%). However, increases are limited to certain areas and again cannot be seen consistently across all parts of the industry.
While more contractors have reported working at or above optimum levels, there are still signs of more labour market challenges with operators and licensees reporting a 2.5% decline in their FTE workforce, and a 6% decline for contractors, in the 12 months to March 2017.
“We’re seeing some signs of recovery for the industry and the global outlook is certainly more positive than it was six months ago, but it is clear that most companies are still suffering,” said James Bream, the research and policy director at Aberdeen & Grampian Chamber of Commerce. “We are hopefully stepping into a more prosperous period in due course but that is not upon us for now.”
The study came as Scottish Enterprise revealed that it had awarded funding of £15.9 million in 2016/17 and supported 82 companies to deliver 111 innovation projects to develop and maintain companies’ global competitiveness.
Companies have used the support for a range of innovation projects, including the development of new technology to improve efficiency and to contribute to a new subsea Centre of Excellence.
“For decades, Scotland has excelled in oil and gas innovation which has been recognised right across the globe,” said Scottish Enterprise director of energy Maggie McGinlay. “Working closely with our partners, such as the Oil and Gas Innovation Centre and the Oil and Gas Technology Centre, we will continue to encourage and support Scotland’s supply chain to deliver forward thinking, ambitious innovation projects.”