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Bright future beckons for oil and gas

THE future looks bright for the oil and gas sector but skills shortages are continuing to push wages up, according to a major industry report.

Companies questioned for the latest Aberdeen and Grampian Chamber of Commerce survey, covering the period between May and October this year, showed an increased level of optimism about prospects in the sector.

Following lower levels of drilling in 2011 there is now increasing activity and investment plus more signs of mergers and acquisitions in the sector.

In July this year Talisman announced it was selling a 49% stake in its North Sea operations to Chinese firm Sinopec for £1 billion in one of the largest deals of the past few months.

The study also found average pay in the sector is around £64,000 against the national average of around £25,000.

Wage inflation is also much higher in the sector at between 5% and 12% as firms bid to keep hold of experienced employees.

The shortages range across professional and technical skills but include geosciences, engineering, drilling and welding.

Across 2012 all operators and 94% of contractors reported increasing remuneration.

The three main reasons for the pay rises were a need to retain core staff, shortages of key skills and the cost of living in the local economy. All three were said to be more evident in 2012 than in 2011.

The research, conducted by Strathclyde University's Fraser of Allander Institute, found there are particular shortages of people in the 35 to 49 age bracket with eight to 15 years of experience.

Kenny Paton, oil and gas partner at law firm Bond Pearce, which backs to survey, said: "The potentially very positive future for the industry is clearly illustrated by this survey which also highlights the considerable challenges of skills shortages and costs.

"Salaries in the sector continue to soar as companies poach expertise from one another to try to plug the considerable gap.

"As the UK competes globally for investment it is important that issues like skills, salaries and the continuing uncertainty over decommissioning are not allowed to kill the goose which is laying the golden egg."

Robert Collier, chief executive of Aberdeen & Grampian Chamber of Commerce, said: "The oil and gas industry is a vital element of the Scottish and UK economies.

"Our latest survey findings give considerable cause for optimism, including new investment and activity.

"However, it also highlights the continuing issue of skills shortages, which is driving staff cost increases across the industry.

"In the longer term, significant new blood will be required to combat the cycle of companies recruiting experienced staff from each other."

Involvement in areas such as decommissioning and renewable remains limited.

Across this survey and the previous one, 64.7% of company's said the referendum in Scotland was not a factor in future plans and investment proposals.

Of the rest 32% said the referendum was something they were considering while 3% did not answer the question.

Mr Collier added: "Whilst the outlook for 2013 also looks positive the industry will surely keep a weather eye on global demand factors and issues closer to home, including the Scottish independence referendum in 2014, when considering their longer term plans.

"North Sea oil and gas is a significant topic in the referendum debate and we will see how the policy proposals surrounding it feed through into business planning in the sector in subsequent surveys."

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