25 th Oil and Gas Survey Professor Graeme Roy Fraser of Allander - - PowerPoint PPT Presentation

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25 th oil and gas survey
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25 th Oil and Gas Survey Professor Graeme Roy Fraser of Allander - - PowerPoint PPT Presentation

Oct 22, 2022 175 likes •374 views

25 th Oil and Gas Survey Professor Graeme Roy Fraser of Allander Institute Context UK Oil and Gas sector prepares to enter the third year of the current low oil price period UKCS production rose during the first half of 2016 but the

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25th Oil and Gas Survey

Professor Graeme Roy Fraser of Allander Institute

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www.strath.ac.uk/fraser

Context

  • UK Oil and Gas sector prepares to enter the third year of the current low oil

price period

  • UKCS production rose during the first half of 2016 but the outlook remains
  • challenging. Production increases mainly achieved on the back of several

years of investment in major new projects

  • Investment has fallen around 40% from peak
  • Sector resilience to global ‘shocks’ – e.g. Brexit & US Elections.
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www.strath.ac.uk/fraser

The Economic Backdrop

  • 0.20%

0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2014 2015 2016 % chnage Q on Q Scotland UK

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www.strath.ac.uk/fraser

Exchange Rate - Depreciation

1.10 1.15 1.20 1.25 1.30 1.35 1.40 1.45 1.50 Jan 16 Feb 16 Mar 16 Apr 16 May 16 Jun 16 Jul 16 Aug 16 Sep 16 Oct 16 Nov 16 $ or € to £ $ to £ € to £

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www.strath.ac.uk/fraser

The survey

  • Since 2004, survey of contractors and operators
  • Regular (repeated) questions
  • Business confidence, activity this/next year, and medium term
  • Annual questions on labour market issues asked in Autumn/Winter surveys
  • Bespoke questions on the future skill needs of the industry and “hot topics”
  • n Brexit and the business cycle.

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www.strath.ac.uk/fraser

The results

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www.strath.ac.uk/fraser

Confidence in UKCS

  • 100
  • 50

50 100 May-Sept04 Jan-May05 Dec05-Mar06 Sept06-Dec06 May-Aug07 Jun-Oct09 Apr-Sept10 Apr-Nov11 May-Oct12 May-Oct13 May-Oct14 May-Oct15 May-Oct16 Net balance (%) Business optimism in UKCS compared to a year ago Business optimism in UKCS over next year

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www.strath.ac.uk/fraser

Confidence elsewhere

  • 100
  • 50

50 100 May-Sep04 Jan-May05 Dec05-Mar06 Sep06-Dec06 May-Aug07 Jun-Oct09 Apr-Sept10 Apr-Nov11 May-Oct12 May-Oct13 May-Oct14 May-Oct15 May-Oct16 Net balance (%) Business optimism elsewhere compared to a year ago Business optimism elsewhere over next year

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www.strath.ac.uk/fraser

Activity levels

25 50 75 100 May-Sep04 Sept04-Jan05 Jan-May05 Aug-Dec05 Dec05-Mar06 Apr-Aug06 Sep06-Dec06 Dec06-Mar07 May-Aug07 Oct-Dec08 Jun-Oct09 Nov-Mar10 Apr-Sept10 Oct-Mar11 Apr-Nov11 Nov-Apr12 May-Oct12 Nov-Mar13 May-Oct13 Nov-April 2014 May-Oct14 Nov-April 2015 May-Oct15 Nov-April 2016 May-Oct16 Percentage Contractors working at or above optimum levels on UKCS work Contractors working at or above optimum levels on overseas work

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www.strath.ac.uk/fraser

Workforce and redundancies

  • 68% of contractors reduced employment in last twelve months
  • Only 8% of contractors increased employment in the last twelve months
  • 25% of contractors reduced their workforce by more than 20% in 2016
  • 50% of contractors expect no change to their UK based workforce in the next

twelve months

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www.strath.ac.uk/fraser

Workforce changes, %

  • Also, further knock-on consequences through the (non-O&G) supply chain
  • 8

All firms

Last year

  • 2

Next year

  • 15

Operators/licensees

Last year

  • 5

Next year

  • 7

Contractors

Last year

  • 1

Next year

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www.strath.ac.uk/fraser

Pay Awards

0% 20% 40% 60% 80% 100% Down > 10% Down > 5% but <10% Down 0% to 5% No change Up 0% to 5% Up >5% but <10% Up >10% % of respondents Survey 21 (2014) Survey 23 (2015) Survey 25 (2016)

Pay decreased by -4.5% (median) - 1st time in history of the survey pay growth was negative

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www.strath.ac.uk/fraser

Recruitment and retention

  • Recruitment and retention problems marginal
  • Although some fears raised over skill shortages with skilled personnel leaving

the industry

  • Reasons for losing staff:
  • 45% of all firms lost staff to other industry
  • 33% of all firms lost staff to retirement
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www.strath.ac.uk/fraser

Hot topics

  • 58% say the UK’s decision to leave the EU has had no impact on their

business

  • Change in $ exchange rates as a result of Brexit has had a negative impact

for 46% of firms

  • The oil price fall since 2014 has had a negative impact for 91% of firms
  • 26% welcomed the stabilisation of oil price in recent months
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The industry has reported that it has suffered skills shortages due to poor workforce planning in the 1980’s. Do you anticipate that we could be creating the same challenges as a result of this downturn?

39.2 27.2 17.6 16.0 Yes, and this could be avoided Based on current business levels it is unavoidable No, last 2 years created 'fit for purpose industry’ Don't know

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What position do you expect to be in by 1 January 2017?

47.2 29.6 16.0 3.2 Restructured and fit for the future Restructured but unsure

  • f future

Growing Declining

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When do you think the sector will reach the bottom of its current cycle?

  • 29% said that it already had
  • 36% said it would bottom out within a year
  • 25% expect it to reach the bottom of the cycle within the next 1-2 years
  • 10% expect this to be longer than 2 years
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25th Oil and Gas Survey