A majority of North Sea oil services firms have increased employee numbers in the last year amid the recovery in the area and diversification into related sectors such as renewable energy, a closely watched survey has found.

The latest Aberdeen & Grampian Chamber of Commerce annual oil and gas industry survey found 54 per cent of contractors increased their workforces in the last year as the rise in the crude price from late 2016 lifted the sector.

The findings provide the latest sign that the North Sea oil and gas industry has returned to growth mode after contracting sharply following the plunge in the oil price from 2014 to early in 2016.

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While the downturn was accompanied by thousands of job losses, skills shortages appear to be becoming an issue again.

The survey results highlight the challenges services firms face recruiting staff with the skills required to help them respond to the energy transition while coping with demand from traditional sources.

Conducted by Aberdeen & Grampian chamber with the Fraser of Allander Institute at Strathclyde university and KPMG, the survey found the percentage of firms increasing workforce numbers rose markedly in the latest year, from 40% in the preceding period.

While twelve per cent cut workforce numbers in the latest year only 3% expect to do so in coming months.

The upturn has been powered by increased activity in the core North Sea oil and gas market. With firms that operate oil and gas fields showing a renewed willingness to invest in developments, a net balance of 43% of contractors reported the value of production-related order books had increased rather than fallen.

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Services firms appear to think the outlook for the market is relatively good with many expecting further increases in the value of orders.

Martin Findlay, office senior partner at KPMG in Aberdeen, said the survey painted a positive picture for the oil and gas sector with growing confidence levels driven by resilience and an increasing focus on innovation.

While the boom conditions seen earlier in the decade may not return, Scotland’s oil and gas sector remains a key growth driver and a vital economic powerhouse

But Mr Findlay added: “It’s clear that the downturn which hit the industry just a few years ago remains a risk factor, with 88% of respondents telling us the oil price and market stability is their biggest business concern.”

The survey results highlight the increasing importance of newer sources of work amid growing awareness of the significance of the challenge posed by climate change.

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It found around half of the firms operating North Sea fields or providing support services have strategies in place to reduce their carbon footprints or to develop low carbon solutions.

Fifty two per cent of respondents reported an increase in demand for their products and services for use in non-oil and gas projects, against just 15% last time.

A further 25% are pursuing work outwith oil and gas, with only 11% not expecting to reduce their focus on the sector.

Shane Taylor, research and policy manager at Aberdeen & Grampian Chamber of Commerce, highlighted the scale of the opportunities available in new markets but noted some firms were concerned about the profitability of the work involved and the availability of skills.

Some 44% of respondents have found it difficult to attract staff to the North-east. A quarter faced difficulties recruiting for non-traditional roles.

The chamber said: “86% of firms expressed some likelihood of engaging in decommissioning activity in the medium term, the highest result since the question was introduced in 2010.”