North Sea contractors reveal growing confidence in oil industry

Confidence in the North Sea has reached its highest level since before the oil price crash, a new survey has suggested.

Almost two out of five (38%) contractors said they are more confident about activities in the UK Continental Shelf (UKCS) in this current year, compared to 10% who are less confident.

That gives a balance of +28% - the highest total since the period March 2012 to November 2013 and significantly better than the -35% recorded last autumn.

Meanwhile, more than half (52%) of businesses taking part in the Aberdeen and Grampian Chamber of Commerce Oil and Gas Survey said they feel the bottom has been reached in the current downturn.

And by January 2018, 42% of firms said they expect business will be growing - compared to just 16% who thought this would be the case for January this year.

Russell Borthwick, chief executive of Aberdeen and Grampian Chamber of Commerce, said the results show “green shoots are visible” for the North Sea.

But he added: “Much of the anecdotal feedback we received highlighted concern in terms of the political environment and indicated that the additional uncertainty around Brexit and the prospect of a second independence referendum could be having an impact on investment.”

The survey, carried out in collaboration with the University of Strathclyde's Fraser of Allander Institute, covered the period November 2016 to April 2017.

At this time, oil prices continued to fluctuate around 50 US dollars (#39) per barrel - with the report pointing out this is half the level witnessed in 2014.

Just over half (52%) of contractors said they are now more confident about international activity, with 6% less confident, giving a balance of +46%

Meanwhile, 24% of contractors said they are working at optimum levels, compared to 12% in the previous survey. However this is well below the peak of 79% who were working at this level in spring 2013.

Job losses in the sector also appear to have slowed, with operators reporting a 2.5% reduction in their UK staff in the 12 months to March 2017 compared to a 15% reduction in the year leading up to October 2016.

Mr Borthwick said: “Although we are now seeing UKCS business optimism finally return to positive territory with 38% of contractors reporting that they are more confident than they were 12 months ago, we must take note of the 52% who feel no different to six months ago.

“This tells us that although green shoots are visible, there is still a way to go in seeing a recovery across the industry.