North Sea oil and gas enjoys investment boom

The 30th Oil and Gas survey has revealed that around 45% of North Sea oil and gas contractors have increased investment spend in the UK Continental Shelf (UKCS) in the past 12 months.

The survey shows the “highest proportion of firms reporting an increase in spend since 2006/07 and firms indicating that they anticipate further rises over the next few years.”

The survey is conducted by Aberdeen & Grampian Chamber of Commerce with the Fraser of Allander Institute at the University of Strathclyde and KPMG UK.

About 40% of firms have increased their total workforce in the last year and and a net balance of 52% expect to increase their spend in staff training between now and 2021.

About 90% of firms are optimistic about Aberdeen’s long-term future as a global energy hub.

The survey looked at work in the six months to April 2019, asking firms about their prospects for 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.

The survey showed contractors in the UKCS are reporting healthy results.

Almost half (49%) of firms are working at or above optimum levels, the highest figure recorded in the survey since 2014.

Almost three quarters (72%) of firms are forecasting an increase in profits in 2019 and the results also recorded the highest figure in this survey’s history indicating a rise in the value of UKCS production-related activity.

Moray Barber, partner at KPMG, said: “It is extremely welcome to see the results pointing to increased investment in staff training, developing new markets and maintenance of infrastructure and it is positive to note that 35% of respondents say that funding and tax incentives influence their decisions to invest in R&D in the UK.

“The report tells us that there has been investment pick up but we need to be cognisant of the fact that this is starting from a relatively low base from the challenging times the industry was facing four or five years ago.

“Around 20% of respondents have said that they don’t take advantage of the UK’s generous tax reliefs for qualifying R&D – our experience is that most oil and gas companies are undertaking some form of qualifying activity and so we as a sector need to keep reinforcing the message that these government backed incentives are there to be claimed and can add real value to your business.”

Shane Taylor, research and policy manager at Aberdeen & Grampian Chamber of Commerce, said: “Our survey paints a picture of an optimistic industry, investing to deliver the opportunity of a productive UKCS and a vibrant future for Aberdeen as an all energy hub.

“The levels of optimism reported in our survey are encouraging but for those of us passionate about the future of the region, it’s excellent to see an overwhelming majority of firms are optimistic about the long-term future of Aberdeen as not just Europe’s oil and gas capital, but as an all-energy hub which will be relevant long after the UKCS comes to the end of its operational phase.

“There’s an incredible opportunity for Aberdeen to leverage its reputation in oil and gas and lead the energy transition.

“Some of the recent partnership projects, such as the launch of the National Decommissioning Centre, and the UK Government’s recent statement of support regarding the Underwater Hub, supported by industry hubs such as the Oil and Gas Technology Centre, act as powerful statements of intent as the North-east looks to build our profile as a global leader in both the energy transition, and as a centre of excellence for subsea engineering.”