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Good times predicted ahead for Aberdeen

Posted on 25th September 2018 by Phil Ainley MCIM

good times predicted ahead for Aberdeen

Since 1851, the North Sea basin can boast a proud history of overcoming the challenges put before it, but the past couple of years have been particularly challenging and lean for the North Sea offshore industry which has had a significant commercial and social impact on the ‘Granite City’ of Aberdeen.

At its height in 2014 the UK oil and gas industry supported some 450,000 workers, but losses of almost 150,000 roles in recent years have hit hard, with Aberdeen being hit particularly hard. According to the report by Skills Development Scotland (SDS) the downturn in the sector will continue to impact on jobs with a further 5,500 expected to be lost over the next decade.

However, if you visited Aberdeen you’d be forgiven for thinking it was a city in the middle of a boom rather than recovering from a slump. Although investment and expansion in other industries can only partially mitigate the recent heavy job losses, there has been more than £5bn worth of public and private sector projects approved for planning or have had funds committed to them (not counting housing) which will be delivered over the coming years.

aberdeen oil rig

Market dynamics are changing and the North Sea offshore industry will need to adapt to achieve sustainable success in the years to come

Green shoots of recovery generating cautious optimism

With the rise in crude oil prices to a four year high of $70 per barrel in January 2018, on top of the extra investment in Aberdeen and the surrounding area and jobs being added to the Exploration and Production sector (E&P), the city could experience an upturn.

Cautious optimism” is a term coined by business owners and council leaders in the area and to cap it off optimism has returned among oil and gas CEOs with 60% believing global economic growth will improve over the next 12 months.(1)

Most companies have significantly reduced their costs and increased profitability. Combine this with the return of growth to the largest economies and CEO’s are now confident demand for energy products will remain strong for the foreseeable future. (2)

Just like other industry leaders, many oil and gas CEOs are undertaking digital transformations of their businesses to gain from sustainable cost reductions, enhanced growth and better informed decision making. The digital transformations are taking place in the back office, supply chain, strategy, general business processes and the overall culture changes within companies.

To sustain the digital changes companies will have to invest in training, collaboration, information sharing practices and quicker decision making. This will promote a shift in hiring strategies to ensure companies can reap the full rewards of the technological advances they are making.

This could see a rise in the recruitment of digital and I.T. contractors in the oil and gas sector and in Aberdeen in particular as the industry embarks on revolutionary changes to secure its future.

One thing is for certain, market dynamics are changing and the North Sea offshore industry will need to adapt to achieve sustainable success in the years to come.

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Sources and credits:

1) www.rigzone.com/news/blog_oil_gas_ceos_confident_of_their_company_growth_pwc_survey_finds-29-mar-2018-154063-article

2) www.pwc.com/gx/en/ceo-agenda/ceosurvey/2018/gx/industries/oil-gas.html

 

Caunce O’Hara are specialists for providing comprehensive insurance policies for offshore contractors.

If you work in the energy industry and would like a quote, please call our award-winning EnCon schemes team on 0333 321 1403

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