MOST oil and gas companies in the North Sea continue to be focused on job cuts as they remain concerned about activity levels in the area, a survey shows.
The findings of the latest Sentiment Index research by Oil & Gas UK underline the scale of the challenge facing the industry in the North Sea, where firms have slashed investment and cut around 5,000 jobs in response to the slump in the crude price slump.
They will lend weight to fears that many more job losses could be on the cards unless the oil price increases significantly.
Yesterday Aberdeen-based Wood Group said 200 North Sea jobs were at risk.
“A large number of companies remain apprehensive over future activity levels and concern over job losses and the cost base continue to be a focus for the majority of respondents,” said Oil & Gas UK.
The trade body said around half the respondents to the survey had reduced employee numbers in the latest quarter.
It added: “The majority of respondents note that they will face significant issues in the future if the oil price does not recover.”
The survey found that confidence levels fell for the fourth quarter running.
However, Oil & Gas UK took some comfort from the fact that the rate of decline slowed in the period.
Oonagh Werngren, Oil & Gas UK’s operations director, said: “While the overall index remains in negative territory for the fourth quarter in a row, this slight improvement in mood is the first upward movement we have seen since Q1 2013.”
The organisation welcomed signs of stability, after many firms cut budgets in the early part of the year in response to the downturn signs.
Ms Wengren said: “A number of companies have already put significant effort into tackling cost and improving efficiency and are beginning to see the impact of these efforts.”
She noted that while a large number of companies were concerned about a further decline in North Sea activity, some said they were busier in the quarter. This may be due to preparations for the annual summer maintenance programmes.
However, Oil & Gas UK noted that the apparent increase in optimism in the quarter coincided with a rise in the crude price during the period. The Brent crude price has dropped to less than $60 per barrel since the survey was completed. Brent crude fetched $115/bbl in June last year.
The headline sentiment index reading was -27, reflecting the fact 41 per cent of respondents said they became less confident during the quarter while 14 per cent reported an improvement in sentiment.
The headline index reading was -31 in the first quarter.
Oil & Gas UK said business sentiment beginning to decline in mid-2012, before the drop in the oil price, amid the challenges of operating in a high cost, mature basin. The rapid decrease in the oil price had further exacerbated these challenges.
Some 175 firms responded to the latest survey including firms that produce oil and gas and services businesses.
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