Tens of thousands of jobs in offshore oil and gas could be lost after a huge price fall followed one of the most severe downturns the industry has experienced.
Industry representative Oil and Gas UK (OGUK) issued the stark warning today (Tuesday) as it reported an “increasingly grim outlook” for companies contending with fallout from Covid-19 and historically low prices.
It follows recent job losses already announced at Sullom Voe Terminal.
OGUK said the industry was likely to suffer a dramatic fall in revenue, which could see some companies fold in a downturn expected to be even worse than the 2015 crisis, from which the sector is only just recovering.
OGUK’s Business Outlook: Activity and Supply Chain report, based on survey responses from its members, found up to 30,000 jobs could be lost in the next 12-18 months.
It highlighted historically low prices for oil ,which had fallen to $22.5 a barrel in March, down 65 per cent on January’s figure, with Brent reaching its lowest point in 20 years at $16 a barrel on 22nd April.
The report also warned that investment was set to reach its lowest level since 2000, while drilling activity could be down 50 per cent on 2019 levels.
Faced with such a bleak outlook, OGUK has proposed a “three-stage framework”, including financial packages, to support the industry, together with its role in achieving a “net zero” future.
OGUK chief executive Deirdre Michie said the industry had 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,” she added.
“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 government and regulators to support industry now, stimulate a recovery and accelerate the transition to a net zero future.”
Earlier, this month Unite Scotland criticised the decision Worley to axe 27 jobs at Sullom Voe Terminal, rather than furloughing the workforce.
Operator Siccar Point and Shell UK had already announced on 30th March that they were to defer work on their Cambo project to next year.
The companies had been planning to make a final investment decision later this year on the project, which would see drilling begin in the Cambo filed, 125km northwest of Shetland, one of the largest undeveloped fields in tUK waters.
Project leaders said the plans had been put on pause due to the “uncertainty of the global situation”, but added that the project remained very well positioned to weather the downturn.