UK North Sea contractors are feeling less confident than a year ago and expect headcount reductions to continue, according to a new survey.
The survey found that three in four North Sea oil and gas contractors are “less confident” about their prospects than they were a year ago.
Seventy five percent of contractors surveyed said they were less confident in their prospects on the UK Continental Shelf (UKCS) while seven percent said they are more confident.
The survey was conducted by Aberdeen & Grampian Chamber of Commerce in partnership with the Fraser of Allander Institute and sponsored by law firm Bond Dickinson.
Oil and gas operators said they have seen their UK-based headcount fall 15 percent over the last year.
Operators surveyed expect their UK headcounts to fall another 17 percent in the coming year.
“The uncertainty which all those in the industry face at the moment regarding their livelihoods continues and any slowdown in the shedding of jobs does not appear to be materializing,” Bond Dickinson oil and gas partner Uisdean Vass said.
Only 14 percent of contractors surveyed said they are working at or above optimum levels in the UKCS, a significant decline from 79 percent three years ago.
The survey also found that the number of firms that said they working at or above optimum levels overseas fell to a historic low of 27 percent.
Forty two percent of respondents said increasing efficiency or productivity is currently their main priority while 23 percent said cutting costs is their top priority.
Respondents said that falling demand, low commodity prices and the economic climate are the top factors constraining contractor activity in the UKCS.
Falling activity levels prompted 44 percent of surveyed contractors to cut overall investment this year while only 11 percent of respondents said they have boosted spending.
The survey’s authors said the downward trend is expected to continue with just under half of contractors expected to cut investment over the next two years.
“In the previous two surveys we carried out, we found confidence had hit record lows, with an all-time low in November 2015. This time, while the figure is still firmly in negative territory, it has marginally improved, which may perhaps show we are near the bottom of the curve,” Aberdeen & Grampian Chamber of Commerce chief executive Russell Borthwick said.