A NEW industry report is warning of up to 30,000 job losses in the oil & gas sector, along with billions of pounds of investment, due to the coronavirus pandemic and a 20-year low in oil prices.
A document released by representative body Oil and Gas UK (OGUK) today warns up to 30,000 direct and indirect jobs could be cut in the next 12-18 months, mostly in the North Sea supply chain.
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The 2020 business outlook report revealed all the North Sea exploration and production firms that took part in a recent survey anticipate a worse outlook for the sector, while 93% of supply chain firms held the same view.
OGUK also expects a drop in capital investment to around £4bn, the lowest level since 1970, as drilling activity in the basin could see a reduction of 50%.
Deirdre Michie, OGUK chief executive, called on the government and regulators to support the industry “now” to stimulate a recovery.
The jobs situation was “undoubtedly bleak”, but she said the North Sea was “an industry worth fighting for”.
It comes as the price of Brent crude oil lingers around $20 (£16), down from $70 (£56) around 12 months ago.
Drilling and well activity is being “severely impacted” with it being “possible that drilling activity this year could fall to in the region of half the levels seen last year”.
A total of 24 wells spudded so far this year compared to 49 at this stage last year.
The largest reduction has been seen in April when just 3 developments were spudded, in comparison to 21 last year. It is likely a similar trend will be seen in May, as companies choose to defer discretionary activities.
A significant number of North Sea firms have either terminated or furloughed staff over the last two weeks.
However, OGUK’s new report found about 30% of firms in the sector had secured government-backed funding through financial support packages.
Putting forward a three-point proposal for the sector recommending improved financial packages and a progressive regulatory, fiscal and policy framework, Ms Michie also called for a sector deal to support the supply chain and accelerate a net-zero future
She said: “The outlook is bleak compared to the picture of steady growth seen only two months ago, before the grip of the pandemic became clear. For an industry just emerging from one of the most prolonged downturns in its history, this is especially concerning.
“The actions we take now for our industry will shape the UK’s energy future for decades, attracting investment, providing skilled employment and unlocking technologies essential to our transitioning economy.
“These may be the most difficult times that any of us have faced, personally, operationally and economically, but our industry has a track record of resilience and working through challenges as they arise and I have no doubt that we will do this again.”
