41% of oil, gas firms have no net zero commitment

Companies in the UK’s oil and gas sector are predicting that the share of their business outside of oil and gas will jump from 21% today to 47% by 2030, according to new industry report The Oil and Gas Transition Survey.

The survey is produced by Aberdeen & Grampian Chamber of Commerce (AGCC), KPMG UK and Fraser of Allander Institute.

The findings suggest that the UK’s oil and gas sector is pressing ahead with diversification, but skills shortages and concerns over lack of visibility around government funded initiatives appear to be creating blockages for net zero ambitions.

And, surprisingly, the report shows 41% of oil and gas companies surveyed “have not developed a specific net zero or carbon reduction strategy.”

Overall, the sector continues to be positive about the future, with 69% of companies expecting revenue to rise in 2022.

Three quarters of companies report being either moderately or extremely optimistic about Aberdeen, Scotland and the UK playing a leading role as a future energy hub.

Martin Findlay, office senior partner at KPMG in Aberdeen, said: As we cautiously emerge from the pandemic, the direction of travel is clear amongst oil and gas companies who are gearing up for a decade of rapid sustainable transformation.

“Fluctuations in energy demand throughout the pandemic, coupled with mounting pressure from governments and consumers have given rise to more acute questions around energy use and how the oil and gas industry should evolve.

“Positively, most oil and gas firms are now doing far more than paying lip service to sustainability with the vast majority believing that strong sustainability credentials are critical to their long-term success.

“Despite this, two in five of those we surveyed have not committed to carbon neutral targets.

“Two years ago, that figure might not have come as a surprise, but today it jars.

“Without clear plans to transition to an integrated energy sector which involves oil and gas and renewables, with viable solutions on transportation and heating, many firms are now facing a clear fork in the road – evolve and thrive or be left behind.

“It’s clear the industry is on the cusp of transformation, and with many businesses having already chosen their path – and heading towards a greener future, the question is how many more will follow and how quickly.”

Aberdeen & Grampian Chamber of Commerce CEO Russell Borthwick said: “The results illustrate that firms in the sector envisage the transition picking up pace rapidly over the next decade.

“The industry is clearly committed to taking a leading role in delivering the UK’s net-zero ambitions, with the majority of businesses committed to achieving net zero.

“30% of firms have set a clear target for doing so, which compares favourably with data on the wider Scottish economy.

“While companies in the sector are actively engaging in the transition, they are also facing some significant barriers.

“Firms are less confident about their ability to secure skilled talent in areas outside of oil and gas, and SMEs in the sector will require more support to identify and develop the skills they require to transform their own businesses.

“Only a quarter of companies stated that government assistance to support them in making the transition was visible or accessible to their business.

“This underlines the importance of providing firms across the supply chain with the vital support they need to diversify into new activities and deliver a just transition.”