Engineering news
A third of the UK’s oil and gas firms are planning further job cuts this year as a result of a slump in prices, according to a new survey. However, the job cuts will not be as severe as it were in 2015, the report from the Bank of Scotland has revealed.
The industry report, called Re-evaluating Strategies, found 43% of companies are planning further cost-cutting measures because of the downturn, with 32% of businesses planning to cut jobs.
Unsurprisingly, companies in Scotland have been particularly hurt by the slump in oil prices, with almost six in 10 saying that their business has been “severely” hit, compared to a national average of four in 10.
Of the 141 companies questioned for the report, nearly six in 10 have had to introduce efficiency measures or cut costs in the past 12 months while for more than half, this has involved making redundancies.
Stuart White, area director at the Bank of Scotland, said: “With oil prices currently hovering around the $50 (£35) mark there is hope that prices have bottomed out and have begun to slowly and modestly recover.
“Many businesses however, undoubtedly face more difficult decisions on cost savings, jobs and investment.
“While the blow from depressed oil prices has been severe for many businesses and individuals impacted by job losses, the sector is proving itself to be among one of the most resilient industries in the UK.”
The survey found that a quarter of companies said they had grown by diversifying into other sectors. Larger firms are looking to decommissioning of North Sea equipment.
Small firms aim to gain more business from renewable energy investments, but there has been a drop in the expectations that business will come from the shale gas industry.
There has also been a sharp pulling back in plans for exporting, down from 91% last year to 67%. That drop has been most notable in those looking at North American markets and firms considering a move into the Middle East. However, interest remains strong in seeking deals in African energy developments.
Companies expect exploration activity to remain subdued until the oil price rises further. It has gone up from a low below $28 in January to about $50 in recent trading.
Expectations of when it could reach $75 to $80 were mixed, with 33% of respondents saying that should be by 2018, and 38% believing it will not be before 2020. Larger oil firms were more likely to see the recovery in prices taking longer.