THE TIDE IS TURNING FOR THE
Martin Findlay, KPMG Aberdeen, UK, reports on the findings of a survey that show the Scottish oil and gas sector is on the brink of transformation.
I
t is no exaggeration to say that the Scottish oil and gas sector is at a tipping point. The transition from carbon-based to sustainable energy sources represents a huge opportunity for the country’s oil and gas firms. But, while the COVID-19 pandemic has put huge pressure on many oil and gas businesses, it has also created a new sense of political confidence for policy makers grappling with the energy transition, accelerating the journey along the road to a low carbon future. No doubt the COP26 conference in Glasgow later this year will focus minds even further. Against this backdrop, the results of the latest Aberdeen & Grampian Chamber of Commerce Oil and Gas Survey are striking, and show a sector that is primed for change. The survey, conducted in partnership with the Fraser of Allander Institute and KPMG UK, gathered the views of 100 firms that employ 27 400 workers in the UK (and more than 183 000 globally) and covers the six months to April 2021.
Almost half (49%) of contractors now say they are on a recruitment drive as they embrace change in the sector, with three-quarters (75%) planning a move into renewables work in the next three to five years – more than in every other survey since the question was first asked in 2015. More than two-fifths (44%) said they are already moving to diversify away from oil and gas and will accelerate this strategy. This should help put to bed the common misconception that the oil and gas industry is the cause of much of the climate crisis, when it is actually often the driving force behind the renewables revolution. Indeed, the firms surveyed in the report said oil and gas will account for less than three-quarters of their business activity by 2025 – down from the current average of 86%. But, while firms appear convinced of the opportunities available in the renewables sector and are taking action to make the most of this new revenue stream, this will require investment.
Driving diversification It is heartening to see contractor confidence in the UK Continental Shelf (UKCS) bounce back so robustly, from a net balance of -76% six months ago as the peak of the pandemic’s second wave loomed, to 6% this spring.
A pressing paradox Unfortunately, the global impact of the pandemic means these firms are approaching this crucial phase in their evolution from a relatively fragile position.
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