UK oil industry ‘must improve’ as it faces more job losses

More than 120,000 jobs are predicted to be lost by the end of this year as a result of the downturn in the UK oil and gas sector, according to an industry report on Friday.

North Sea oil and gas
The study by marketing services company Experian for the trade body Oil & Gas UK estimated that 84,000 jobs – many directly linked to the industry but others in the supply chain and even in such trades as hotels, catering and transport – were lost in 2015 following the slump in the price of oil, with another 40,000 expected to go this year.Oil & Gas UK said that, at its 2014 peak, the industry directly or indirectly supported some 453,000 jobs while, by the end of 2016, this figure is expected to be reduced to about 330,000.Publication of the report followed a survey last week by the Bank of Scotland indicating that a third of all companies in the sector were expecting to reduce staff numbers further this year.Deirdre Michie, chief executive of Oil & Gas UK, said, "We cannot underestimate the impact the global downturn in the industry is having on the UK economy, nor the personal toll for those who have lost their jobs, and the effect on their families and colleagues."We recognise this and are doing everything we can to support these people, working with the UK and Scottish governments through their task forces to find suitable alternative employment, as well as with the unions, as we go through these difficult times."The industry has been spending more than it is earning since the oil price slump towards the end of 2014. This is not sustainable and companies have been faced with some very difficult decisions. To survive, the industry has had no choice but to improve its performance."It is looking to find efficiencies to restore competitiveness, to attract investment and stimulate activity in the North Sea. With up to 20 billion barrels of oil and gas still to recover, this region is still very much open for business."Industry leaders will meet next week at Oil & Gas UK's annual conference in Aberdeen to consider how it manages its way safely through the current downturn and how it can emerge in a competitive form that will safeguard the jobs it still supports.Ms Michie said that the year-end estimate of 330,000 jobs supported by the industry still represented "a significant number". But she added, "The total employment we will sustainably provide depends on the level of investment attracted into the basin. If investment falls, then so will jobs. The interventions we make now will be critical to shape the industry's direction and help stem future losses."Everyone in the sector can play a part. Effective workforce engagement is vital onshore and offshore, as is greater cooperation – within teams, within companies, across the industry and with the regulators and governments."Competitiveness is improving as a result of the work the sector is doing in this area and is being reflected in the reduction in unit operating costs from almost $30 a barrel in 2015 to around $17 this year."But to protect our industry and the skilled jobs it provides we need to see further efficiencies. The work of companies and of the industry's Efficiency Task Force needs to focus on ensuring that the changes being put in place are sustainable for the future that we all need to work towards."It is also important we consider what we can do in the immediate term to stimulate activity in support of exploration and development of existing small pools opportunities to help support the supply chain as it goes through these challenging times."

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