Powerful trade group Oil & Gas UK (OGUK), the representative body for the UK’s offshore oil and gas industry, warned on Tuesday that up to 30,000 jobs could be lost in the sector.

The warning came as OGUK called for “the transition to net zero to be put at the heart of recovery plans.”

Companies in the sector are reporting an increasingly grim outlook as they deal with the fallout from the coronavirus pandemic, a 20 year low in oil prices and a 14 year low for gas prices.

The figures are published in a report by OGUK following a survey of its membership.

The Business Outlook: Activity and Supply Chain report calls for urgent action to protect energy security, jobs and energy regions.

OGUK has asked governments and regulators to support a three-stage framework to support the sector in dealing with the immediate crisis while positioning it to play a key role in the UK’s transition to a net zero future.

OGUK anticipates that capital expenditure (Capex) could fall to between £3.5 billion and £4 billion, the lowest investment since 2000 and amongst the lowest levels of investment since the early 1970s.

OGUK also warned that drilling activity this year could be down by 50% on 2019 levels – pushing activity levels to record lows.

“Although there is still a significant degree of uncertainty in estimates affecting the next 12-18 months, based on company feedback, OGUK currently anticipates that the level of direct and indirect jobs supported by the industry could contract by up to 30,000 during this period …” said OGUK.

“Around 30% of respondents to the recent business survey identified that they were successful in securing funding through government COVID-19 financial packages, with over 40% sounding out the different options as this report went to release.

“The three-stage framework proposed by OGUK covers: immediate needs, industry recovery and accelerating to a net zero future.

“It includes recommendations to improve current COVID-19 financial packages, retaining a sector leading and progressive regulatory, fiscal and policy framework, as well as the development of a sector deal which will support the supply chain and accelerate the UK towards a net zero future.”

OGUK chief executive Deirdre Michie said:  “Like so many industries, our members have been profoundly impacted by COVID-19.

“With historic low oil and gas prices coming so soon after one of the most severe downturns our sector has experienced, these findings confirm an especially bleak outlook for the UK’s oil and gas industry.

“If the UK is to maintain its supply of domestic energy, protect jobs and build the critical infrastructure it needs to transition to a net zero future, ours is an industry worth fighting for.

“It’s why OGUK is today outlining a three-stage framework with a range of measures for governments and regulators to support industry now, stimulate a recovery and accelerate the transition to a net zero future.”