Oil and gas contractors are being pressured by clients to become permanent employees, as increasingly desperate North Sea energy and services firms try to hold onto skills needed to sustain growth.
This is according to the 18th Aberdeen and Grampian Chamber of Commerce Oil and Gas survey, which shows that 40% of energy firm operators and 66% of service and support contracting companies have staff shortages.
But regardless of moves to convert contractors into employees, the survey predicts that the number of oil and gas contractors required in the UK will increase by 20% during 2013. This represents a slight fall compared to oil and gas contractor demand growth during 2012, and is despite 80% of energy firm operators increasing their contractor headcount during the period.
“The survey shows rising employment and the continuing skills shortage is a key factor in driving companies to retain people by making them permanent employees, rather than contract staff,” explains Kenny Paton, oil and gas partner of Bond Dickinson, the law firm that sponsored the survey.
“As with previous surveys, the skills shortage is identified as constraining activity,” says Aberdeen and Grampian Chamber of Commerce’s chief executive Robert Collier. He notes that despite clients taking measures to retain key staff, the lack of talent is holding firms back. Survey results showed skills shortages to be the third highest barrier to growth in the sector.
Not-for-profit training organisation OPITO (formerly the Offshore Petroleum Industry Training Organisation) claims that an additional 10,000 new workers must be recruited and trained over the next five years to meet client demand.
However, although the threat posed by skills shortages is serious, the UK’s oil and gas industry is showing record levels of investment and rising levels of business confidence, with three-quarters of operators and services firms operating at or above optimum levels.
Collier believes that a stable tax regime and existing tax incentives for investment and decommissioning underpin much of the resurgence in activity: “The progressive changes to tax allowances which the Government has introduced since 2011…resulted in all operators reporting rising activity last year, with two out of three anticipating the same this year.
“The current air of optimism and confidence in the UK's oil and gas industry is in marked contrast to just two years ago following the government’s surprise hike in tax,” continues Collier. “The 18th survey illustrates the importance of a stable and predictable tax regime to safeguard the long-term future of the oil and gas industry and maximise production on the United Kingdom Continental Shelf.”