Recruitment by oil and gas contractors in the UK Continental Shelf (UKCS) is on the rise as business confidence in the sector reaches its highest level since 2013, according to an industry report released on Wednesday.

The findings of the 29th Oil and Gas survey, conducted by Aberdeen & Grampian Chamber of Commerce in partnership with the Fraser of Allander Institute and KPMG, reveal that 21% of firms have increased their total UK-based workforce by more than 10% in the last 12 months, with 33% anticipating this trend will continue in 2019.

Looking further ahead, 34% percent of firms expect their headcount for contract staff to rise over the next three years.

Almost two thirds (65%) of firms expect the level of core staff to increase and only 5% expect a fall over the same period.

Indeed the survey shows growing business confidence across the board with 63% of contractors more confident about their current UKCS activities compared to the previous survey, the highest level since 2013.

The industry appears to be setting its sights on growth opportunities, with 58% of firms forecasting an increase in profits in 2018 and a net balance of 50% of firms anticipating an increase in the value of production-related activities.

The survey looked at work in the six months to October 2018, asking firms about their prospects in the year ahead as well as the next three to five years in order to assess trends in exploration and production, decommissioning and other related oil and gas extraction activities both in the UK and international markets.

Moray Barber, partner at KPMG, said: “Despite a recent reduction in the oil price, the relative stability of recent months is driving a more positive sentiment, and it’s hugely positive to see business confidence amongst contractors improve further on the already high levels witnessed over the past two years, and that optimism for the future outlook of the sector is high.

“The price of oil is driving a more positive sentiment across the industry, but the survey does highlight the importance of retaining our best people and ensuring that the next generation of talent has the right type of skills for the coming energy transition.

“We need to be asking where the next generation of talent is going to come from, what skills do they really need, and what are we doing in industry and academia to ensure we have enough people to help sustain that headcount growth?

“Overall, this survey tells us that change is afoot and the direction of travel is positive, but there continue to be potential traps along the way, not least the impact of Brexit, a potential impending skills gap and environmental and climate change risk.

“We believe the industry is alive to these challenges as we are seeing our clients develop growth strategies and scenario planning to deal with the risks these present, as well as driving forward their technology and innovation agenda to become disruptors in their own right.”

Russell Borthwick, chief executive of Aberdeen & Grampian Chamber of Commerce, said: “The recovery of the oil and gas sector has been slow and steady since the low points of 2015 and 16 however a level of uncertainty does remain.

“We are all watching and trying to understand the implications of political declarations relating to the UK’s divorce from the EU.

“Interestingly the views of firms in the sector on Brexit have remained relatively unchanged since we first asked them to predict the impact of the vote in 2016.

“This survey again demonstrates a clear divide in opinion with half of firms anticipating this will have no effect on business activity in the UKCS, while 45% are predicting a negative impact.

“Contractor optimism not only remains high for UKCS operations but is continuing to grow for international markets too, where we are now seeing the highest figure since autumn 2006.

“It is vital however, if we are to achieve the ambition of creating a world class all-energy hub here beyond the operational phase of the UKCS, that supply chain companies continue to think about internationalising rather than simply re-filling order books with emerging contracts on their own doorstep.”