Coronavirus: One in five UK oil and gas companies expect to cut more jobs in 2021

Saleha Riaz
·3-min read
North Sea companies are concerned about an uncertain future as the UK is putting itself on a course to drastically reduce emissions. Photo: Getty Images
North Sea companies are concerned about an uncertain future as the UK is putting itself on a course to drastically reduce emissions. Photo: Getty Images

About one in five British oil and gas companies expect to cut more jobs in 2021 as they worry about what the country’s plans to cut emissions means for them, having already taken a hit during the pandemic.

That’s according to research by Aberdeen and Grampian Chamber of Commerce in partnership with the Fraser of Allander Institute and KPMG showed the challenges being faced by the UK’s North Sea industry.

It revealed that North Sea companies are concerned about an uncertain future as the UK is putting itself on a course to drastically reduce emissions.

But experts say there can still be a role for the offshore oil and gas industry.

READ MORE: Oil trades at highest level since March on wider market confidence

Shane Taylor, research and policy manager at the Aberdeen and Grampian Chamber of Commerce, said the expertise and skills in the communities that power offshore oil and gas can be “key contributors” on the road to net-zero.

The study also found that 22% of contractors in the industry laid off more than 10% of their workforce in 2020. More than three-quarters of the firms surveyed said they had taken advantage of into some form of government support during the pandemic, when oil prices crashed due to falling demand, with many tapping into the furlough scheme.

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Taylor also said that “although government support has had clear value in supporting firms and jobs through this challenging period of suppressed demand, the only sustainable way to give businesses and workers clarity is a clear route to heightened levels of activity in the future.”

The benchmark Brent price fell drastically as oil prices took a hit during the pandemic, but has improved since. Chart: Yahoo Finance UK
The benchmark Brent price fell drastically as oil prices took a hit during the pandemic earlier this year, but has improved since. Chart: Yahoo Finance UK

The news comes after major oil companies BP and Shell announced job cuts earlier in the year.

Back in June, BP (BP.L) said that it was axing 10,000 jobs, citing the widespread economic fallout from the coronavirus pandemic and the resulting slump in oil prices.

The job cuts, equivalent to 15% of the company’s global workforce, would mainly affect senior office-based roles, the company had said.

“The oil price has plunged well below the level we need to turn a profit. We are spending much, much more than we make,” chief executive Bernard Looney had said at the time.

And in September, Royal Dutch Shell (RDSB.L) revealed that it was going to cut 7,000 to 9,000 jobs as part of a major restructuring plan to shift the oil and gas giant to low-carbon energy.

The jobs cuts equated to just over 10% of its workforce. Shell has 83,000 employees, according to its figures at the end of 2019.

But recently there has been some positivity around oil prices. Earlier this week oil traded at its highest level since March as the commodity was swept up in wider market enthusiasm about the US presidential transition process getting underway and positive progress on the vaccine front.

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