12,000 new entrants to join offshore oil and gas industry in next five years says industry report


9th December 2014

The oil and gas industry, which currently supports one in 80 jobs across the UK, will provide careers for some 12,000 new entrants over the next five years according to a report: ‘Fuelling the next generation’ released today (Tuesday 9 December).

The report, produced by professional services firm EY, was commissioned by offshore trade association Oil & Gas UK, sector skills organisation OPITO and the Department for Business, Innovation & Skills.

Dispelling the popular ‘ageing workforce’ myth, the report reveals the offshore oil and gas industry has a relatively young workforce. It notes the industry has a lower proportion of over-55s at just over 10 per cent compared to a national average of 32 per cent. In addition, the proportion of those aged 35 and below represents approximately 40 per cent of the workforce compared to a national average of 31 per cent.

The report also shows that the sector is making successful efforts to build a sustainable pool of talent for the future with 86% of companies having programmes in place for graduates and/or apprentices and the sector supporting 6,000 graduates and 13,000 apprentices.

The Rt Hon Matthew Hancock MP, Business Minister welcomed the report, saying:

“The Industrial Strategy provides a framework for success for the oil and gas industry. I hope today’s report gives businesses across the UK the tools they need to create more skilled jobs for Britain’s young people, compete on the global stage and help Britain prosper.”

The report also notes the offshore oil and gas industry currently employs 1 in 80 of the UK workforce, with the average annual salary now standing at £64,000.

Although over the next five years, total employment is expected to fall as investment in the UK Continental Shelf (UKCS) begins to naturally decline, the report also highlights that this impact should be offset in part by growing supply chain opportunities in export markets, the need to decommission North Sea assets, and new prospects for an onshore shale industry.

In addition, the report outlines 70 per cent of respondents said they were experiencing difficulties in recruiting. It further notes the scale of the shortage is markedly less pronounced than 12-18 months ago, and is limited to specific areas including: technical safety; drilling, engineering, geosciences and business support services – predominantly in Aberdeen, the UK’s oil and gas hub.

Gordon Ballard, chairman of the Oil and Gas Industry Council, commented:

“As the second largest oil and gas producer in Europe the UK’s offshore oil and gas industry is a great British industrial success story. We hope that this report will serve as a useful tool for companies of all sizes, on both sides of the border, to grow not only their domestic business but export their considerable expertise across the globe.

“The Oil and Gas Industrial Strategy provided us with insight into this sector’s £35 billion supply chain earlier this year. This latest review builds further on the skills element of that strategy and better equips us to face the considerable physical and fiscal challenges ahead.”

Derek Leith, EY partner and head of the firm’s Aberdeen office, added:

“We gathered critical workforce data to identify the demographic and skills composition of the industry today and predict how skills demand will change in the next five years if the UK oil and gas industry is to sustain its reputation as a global centre of excellence.
“The future of this industry will be driven by trends in domestic capital expenditure, exploration activity, decommissioning, and expansion into international markets – which could account for around a third of activity.”

The report further notes the UK has become a global centre of excellence for oil and gas with £14.8bn of export revenue delivered over the last year. In addition, it outlines that the UK oil and gas industry boosts the country’s trade balance by £30bn per year - approximately 27 per cent of the UK’s total trade deficit.

John McDonald, managing director of OPITO, added:

"We welcome the release of this report which offers significant insight into the skills requirements of our industry and will provide critical intelligence to individual companies, Government and education providers alike.

"It is vital that we build on this momentum and using today's report as a blueprint, OPITO will now lead on the creation of a skills strategy to ensure a workforce fully equipped to sustain the oil and gas industry for years to come."

The study found the UK upstream oil and gas industry supports a total workforce of 375,000, which includes 94,000 jobs induced as a result of local activity generated by the sector. Furthermore, women now represent nearly a quarter of the total workforce - a considerably lower proportion than the national average (47 per cent) though comparable to other industries which focus on qualifications in Science, Technology, Engineering and Maths (STEM).

Today’s report details that the Industrial Strategy provides key stakeholders with a framework to act on the report findings and develop a ‘skills alliance’, with action already underway including the new Centre for Doctoral Training, the National College for Onshore Oil and Gas, a programme to retrain ex-military personnel.

Stephen Marcos Jones, business development director at Oil & Gas UK, discussed the value of the project in the context of the current business environment:

“Almost 43 billion barrels of oil and gas have been extracted from the North Sea, and with potentially some 24 billion still to come, this industry will continue to provide careers here in the UK for many decades to come.

“As one of the most expensive offshore basins globally, with development costs per barrel having increased five times over in the last ten years, this report couldn’t have come at a more crucial time for the sector and we believe its guidance will prove invaluable in setting the skills agenda for the sector.”

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