The pace of job losses in the UK oil and gas industry has yet to slow even as oil prices have recovered from multi-year lows, according to a new report.
A survey conducted by the Aberdeen & Grampian Chamber of Commerce found that more job cuts will likely hit the UK oil and gas industry in the coming year.
The report was completed in partnership with the Fraser of Allander Institute and sponsored by law firm Bond Dickinson.
The Chamber of Commerce characterized the findings as “stark” and added that there has “been no slowing in the job losses in the oil and gas industry this year.”
The survey found that more than two-thirds of employers shed staff over the past year, with operators cutting about 15 percent of staff and contractors trimming headcounts by 7 percent.
The survey found that more contractors reduced both their permanent and contractor headcounts this year than at any other point in the history of the survey.
The survey also found that fewer contractors are working at or above optimum levels than ever before.
Only 12 percent of contractors said they have been working at or above optimum levels, the lowest level since the survey began in 2004 and down from a peak of 79 percent in the spring of 2013.
However, the report found that there are “some positive signs” that the rate of layoffs could slow in 2017.
Operators now expect a 5 percent reduction in headcount, down significantly from 17 percent six months ago.
Contractors now expect a 1 percent headcount reduction, down from 2 percent six months ago.
The survey also found that confidence levels for operations in the UK Continental Shelf (UKCS) have improved over the past 12 months.
Of the contractors surveyed, 12 percent said they are more confident about their activities in the UKCS for the current year, up from 7 percent of contractors surveyed in May.
Only 47 percent of contractors surveyed said they feel less confident about UKCS activities, a sizable drop from the 75 percent who said they were less confident in May.
Two out three survey respondents said they believe the oil and gas sector has reached the bottom of the current downturn, or will reach bottom within the next year.
A quarter of respondents said they believe the bottom will be hit within the next one to two years.
“We’re likely to remain in an uncertain position through 2017 and ‘the bottom’ will arrive at different times and feel different for each company,” research & policy director at Aberdeen & Grampian Chamber of Commerce James Bream said.
The survey also found that 43 percent of respondents have reduced pay in the last year, with 15 percent of respondents cutting pay by an average 10 percent.
Forty percent of all firms surveyed reported making “significant changes” to terms and conditions, up from 25 percent in May.
Those changes include salary and bonus reductions, changes in shift patterns, working hours, pension contributions, medical plans and benefit packages.
When asked about the potential impacts of the Brexit, 58 percent of respondents said they expect the decision to leave the European Union will have no impact on their businesses.
Just under a third of respondents said they believe the Brexit will have a negative impact on their business while only 3 percent expect a positive impact.
“The green shoots of recovery may be beginning to push through. People are slightly more optimistic about the future for both the UKCS and the international oil industry but the improvement is from a very low point,” Bond Dickinson oil and gas partner Uisdean Vass said.