A FRESH wave of job losses is looming in the North Sea following the revelation that around two-thirds of oil and gas firms have been forced to cancel projects.
The warning comes after a survey found confidence levels have fallen to a record low in the North Sea following the sharp fall in the price of crude oil since last year.
The research by Aberdeen and Grampian Chamber of Commerce provides further evidence of the grim toll of the price fall on the industry as firms scale back developing new fields and on exploration.
"Confidence levels are at an all-time low and we are now experiencing our first 'recession of confidence', and it looks gloomy in the year ahead too," said James Bream, the chamber's research and policy director.
Survey sponsor law firm Bond Dickinson said more job cuts look inevitable.
"There could be many more job losses to come on top of the 5,500 estimated so far," said Uisdean Vass, oil and gas partner at Bond Dickinson.
Last month the new head of the Oil & Gas UK trade body, Deirdre Michie, warned workforce numbers may never recover to the levels seen during the boom in investment in the North Sea that came juddering to a halt last year.
Brent crude fetched around $65 per barrel yesterday compared with $115 in June.
The survey's authors said the best that could be hoped for was a slowly rising oil price over the next couple of years.
Their findings will heighten fears that the UK North Sea industry may be set on a long period of decline unless there is a dramatic improvement in trading conditions.
Only one of the oil and gas firms that responded expected to increase investment in the next two years.
The chamber noted that signs that takeover activity in the area is increasing suggests some see opportunities amid difficult times.
However, the only form of work that increases over the next few years may be the decommissioning of production assets like offshore platforms and pipelines.
Mr Vass noted more than 80 per cent of contractors involved in decommissioning are reporting increased workloads.
Respondents said the UK Government needs to do more to encourage exploration to help develop the flow of new projects.
Oil & Gas UK said it had constructive talks about North Sea tax matters with Treasury Minister Damian Hinds yesterday.
Ms Michie said: "We had a positive meeting with the Exchequer Secretary and are heartened to hear of his Government's commitment to measures which can provide immediate support and form a long term strategy to reduce the burden of tax on the basin over time."
A Scottish Government spokeswoman said not enough had been done by the Treasury to support the industry.
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