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Oil and gas contractors should target juniors for contracts, as operators shed staff

Oil and gas contractors in the UK who are struggling to stay in contract should look towards independent and junior oil firms as a potential source of contracts. This comes after it emerged that a number of smaller firms are continuing to explore opportunities within the North Sea, despite collapsing oil prices and a retreat by oil majors.

Earlier this week, operator BP announced plans to cut 4,000 staff from its global workforce. This is just one of the many cost-cutting measures employed by oil and gas clients to counter the ongoing decline in oil prices, which has now reached $30 a barrel and is predicted to fall even lower.

BP’s North Sea operations will account for 600 of the total redundancies, all of which will occur within the operator’s upstream oil exploration and drilling business. The cuts are expected to take place over the course of the next two years.

However, Rigzone reports that, whilst BP is one of several major firms opting to cut back on investments in order to remain competitive within the market, a number of smaller independents and juniors consider the North Sea to offer opportunities for them.

As a result, there are plans to build exploration wells and progress is also being made on a number of field development projects, generating contract opportunities in the process.

“Whilst contractor prospects of securing contract roles with major firms appear increasingly bleak, it’s refreshing to see that juniors are recognising the potential of the North Sea and taking advantage of the situation,” highlights ContractorCalculator CEO Dave Chaplin.

“Contractors who are struggling to source UK contracts may be better suited to exploring opportunities with these smaller firms, many of which are actively pursuing a number of North Sea targets.”

Notably, Premier Oil plc has two offshore UK exploration wells planned for the first half of 2016, whilst EnQuest plc recently confirmed that it will be drilling development wells at its Scolty/Crathes fields midway through 2016.

Contractor hopes of securing work with junior firms may receive a boost as a result of findings from the Aberdeen & Grampian Chamber of Commerce’s (AGCC) 23rd Oil and Gas Survey, published in November 2015, which reported a significant exodus from the sector as a result of diminishing confidence.

31% of contractors and other workers leaving services companies chose to depart the oil and gas industry altogether in 2015, whilst a further 29% had left services companies in order to retire.

“Whilst the number of contract opportunities with junior firms won’t match up to that offered by major oil companies, the diminishing talent pool that we have witnessed over the past year plays into the hands of contractors still in search of work,” Chaplin concludes.

Published: 14 January 2016

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