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UK: Around 30,000 Offshore Oil & Gas Jobs at Risk

April 29, 2020

Illustration; Image by wanfahmy / AdobeStock

Illustration; Image by wanfahmy / AdobeStock

Up to 30,000 jobs could be lost in the UK's offshore oil sector as companies grapple with the effects of the coronavirus pandemic and a 20 year low in oil prices and a 14 year low for gas, Oil & Gas UK has warned.

The industry is expected to see a dramatic reduction in revenue, sparking concerns about the ability of some companies to survive a downturn that is likely to be even more severe than the one in 2015 which the sector is just emerging from, the industry body said.

"There is now a stark contrast in sentiment compared to the beginning of the year with all E&P companies and 93% of supply chain firms reporting a worse or significantly worse outlook for 2020," OGUK said in its report on Tuesday.

OGUK anticipate that CAPEX could fall to between £3.5-4 billion, the lowest investment since 2000 and amongst the lowest levels of investment since the early 1970s. OGUK also anticipates that OPEX will be reduced by 10-20%, compared to expectations at the start of the year, to around £6-7billion

OGUK has also warned that drilling activity this year could be down by 50% on 2019 levels – pushing activity levels to record lows, and the industry body has called for urgent action to protect energy security, jobs, and energy regions.

"The position of many areas of the supply chain is increasingly fragile. Revenues and margins across the supply chain are expected to fall by 20-30 percent, on top of reductions seen during the last downturn. The impact on businesses will vary depending on their position in the industry, with some areas of the supply chain expected to see greater reductions," OGUK said.

"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," OGUK said.

According to the OGUK survey, as part of their response to the crisis more than three-quarters of supply chain companies plan to increase their non-oil and gas work this year.

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 recovery and accelerate the transition to a net-zero future.”

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.

Deirdre Michieenergyenergy security

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