Since June the Oil & Gas sector has experienced a 40% drop in the cost of oil, and with no way of knowing whether this decrease can be expected to continue or if it is merely a one-off, companies both big and small are unsure how to respond to their diminishing profit margins.
Such is the worry that several of the UK’s Oil and Gas industry bodies, including Opito (industry skills and safety body) and the Department for Business, Innovation and Skills, have commissioned a study into the longer term effects.
The report concludes that on account of the recent fall in oil prices that there will be a decline in the workforce with estimates of a loss of around 35,000 jobs (approximately 10% on current levels) by 2019. Smaller companies are likely to be worse affected by this as they are left more exposed; Whereas Mid league companies may see this as an opportunistic time such as BP did in the 1990s, when the falling oil prices paved way for them to win a several successful acquisitions which made them the global player they are today.
Investment bank Morgan Stanley warn that oil could fall to as low as $43 a barrel next year. In response and in contrast to the 1990’s big players such as oil giant BP have even accelerated their redundancy programmes suggesting that there will be tougher times ahead. Analysts have predicted that a wave of mergers may soon occur, as we have already recently seen between Halliburton and Baker Hughes, with rumoured talks between BP and Royal Dutch Shell.
These circumstances may also act as a catalyst for something more positive; companies will be forced to maximise their production methods and efficiently extract the oil. We may end up with the development of less expensive exploration, new technologies or use of different techniques such as onshore drilling and fracking, both of which hold the possibility for cheaper extraction, production and sale.
Whilst the report is seemingly negative in its nature, here at Blueprint we believe that the oil industry is a resilient market and will still be in need of the UKs top talent for years to come. Stephen Marcos Jones, business development director at Oil and Gas UK, points out that “almost 43bn barrels of oil and gas have been extracted from the North Sea, and with potentially some 24bn still remaining, this industry will continue to provide long term careers opportunities here in the UK for many decades to come”.
If you would like to find out what current vacancies we have within the Oil and Gas & Energy sector give us a call on 02392 603030.
Alternatively click here to see a full view of all current opportunities.
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