Industry chiefs from BP, Shell, Total and the government are to meet on the sidelines of the Offshore Europe conference in Aberdeen this morning after the release of new research showing employment in the UK oil industry has fallen by 15 per cent from 440,000 to 375,000 since 2013, reports The Times.
The first full estimate of the scale of the impact on the industry from falling oil prices comes as companies battle to slash costs to cope with a plunge in crude to below $50 from more than $100 in September 2014.
One of the proposals under discussion is a move towards unitisation where oil companies pool their North Sea assets into a single business to collaborate more effectively and aggressively attack costs.
The move would see some of the fiercest oil industry rivals start to share warehouses, pipelines, subsea equipment, support vessels and other facilities, and would represent a fundamental shift in the way the industry operates to deal with the downturn.
“That approach is being discussed more and more,” said Mike Tholen, of Oil & Gas UK, whose estimate of 65,000 job cuts was contained in the group’s 2015 Economic Report, published today.
“It’s a much more collaborative and production-line-style approach.”
Another industry chief at one of Europe’s biggest oil companies said that unitisation of assets was one of the only viable paths left for companies pressing to maintain profitability in the North Sea, where costs are among the highest in the world.
“We have to do some pretty radical things,” he said, adding that job cuts and traditional cost cutting alone would not be sufficient to ensure the long-term viability of the industry if oil prices remain depressed. “We have to look at radically different ways of managing and utilising assets,” he said.
Among the 300 industry executives attending the summit organised by Oil & Gas UK are Paul Goodfellow, Shell’s upstream chief for the UK and Ireland, Trevor Garlick, BP’s regional president for the North Sea, John Pearson, Amec Foster Wheeler’s group president for Northern Europe, and Deirdre Michie, chief executive of Oil and Gas UK. Senior officials from HM Treasury and Andy Samuel, chief executive of the UK Oil and Gas Authority, are also attending.
Oil & Gas UK said job losses across the industry were not the only sign of the pain being inflicted on the North Sea. Exploration activity is at its lowest level since 1964. Tax receipts are expected to crash to just over £2 billion this year from £14 billion in 2008-09. They are forecast to decline to as little as £500 million by 2021.
Mr Tholen said since the downturn began, about 6,000 jobs had been lost in front-line roles on offshore rigs and installations with about 30,000 more in the onshore supply chain, including service companies and manufacturers.
A further 30,000 had been lost in “induced jobs” in other industries that benefit indirectly from the North Sea oil and gas industry as suppliers of food, services or transport.
