Attractiveness key to expansion of oilfield services
The UK’s oilfield services companies plan to increase their workforces by an average of 10% over the next two years, according to a new report from EY.
More than 75% of businesses surveyed in conjunction with Oil & Gas UK for the professional services firm’s latest UK Oilfield Services Industry Review (published today) expect to expand their employee base, with 90% envisaging an increase in revenues.
However, around half (53%) identify sourcing suitably qualified personnel as the main factor limiting growth in their organisation, suggesting that raising the profile of the industry is an imperative.
Nearly two thirds (59%) also stated that any surprise changes to the fiscal terms for the industry would negatively impact on their plans.
The oilfield services segment, which is concerned with providing the equipment and services used in the exploration for and extraction of oil and natural gas, directly employs around 93,000 people in the UK according to current available figures.
A global leader, outperforming other UK industrials
Ally Rule, a partner at EY in Aberdeen and the report’s author, said: “The oilfield services segment continues to outperform most other UK industrial sectors, despite the recession. The UK, particularly the north east of Scotland, is recognised as a global leader and has the potential to deliver even more skilled jobs and greater export opportunities.
“There is evidence of record order books and rising revenues, but this is dependent on a stable fiscal environment. Changes made to the tax regime following the increase in the supplementary charge in 2011, alongside the introduction of an agreed framework for assurances on decommissioning tax relief, are redressing the balance and increasing confidence in the sector.”
A worldwide reputation for excellence
The report states that long term success is dependent on recognition of where the most significant growth opportunities lie – the global marketplace – but Malcolm Webb, chief executive of Oil & Gas UK believes UK oilfield services companies are already in an advantageous position.
“Britain’s oilfield services sector is a core component of the UK’s engineering and manufacturing base and enjoys a worldwide reputation for excellence and innovation honed over 40 years at the cutting edge of exploration and production,” he said.
“EY’s report highlights a sector in robust health. With up to 24 billion barrels of oil and gas left to recover in the UK, continued investment in our own reserves bodes well for the supply chain and, subsequently, UK employment, tax revenues, energy security and balance of trade.”
Long-term opportunities exist, both at home and abroad
Nonetheless, the report also identifies the home-grown opportunities that still exist for the segment. The maturing North Sea infrastructure presents opportunities for brownfield projects as well as substantial modifications and upgrades of installations.
Beyond that, decommissioning will result in 90% of the North Sea’s 600 offshore oil and gas installations, 470 of which are in UK waters, being completely removed from their marine sites and brought to shore for re-use, recycling or other disposal means.
Ally Rule said: “Over recent years, technical innovations have meant decommissioning dates have generally been deferred, helping to extend the economic life of the basin.
“But those oilfield services companies whose products and services can be applied to the decommissioning industry can benefit from those opportunities alongside new developments,” he concluded.