The oil and gas industry has been in a period of transition since the 2014 oil price collapse, but thanks to major cost-cutting exercises and increase in collaboration it seems that we’re working more efficiently and better than ever. But, with a lack of money being spent on new field development, how long can it last?
2019 saw the oil price stumble its way through rises and falls but finished at roughly the same point as 12 months prior. We’ve seen the largest exporters halting production, protests and a shift toward carbon neutrality, but will this see production slow or the price rise?
Predicting the oil price over the next 12 months is risky business. If the last five years tells us anything, it’s that with so many influencing factors – including geopolitics and environmental disasters - it’s not always predictable.
There’s one major change coming in 2020 that has the potential to shake the oil and gas industry to its core. Brexit.
With little information about what will happen now that the United Kingdom has left the European Union, we can only assume the potential long and short term effects it will have on the oil and gas industry. In 2018, Oil and Gas UK published its economic report and said: “it is vital that arrangements are in place between the UK and EU to allow the continued frictionless movement of people, ensuring that there is no increase in labour costs and to mitigate concern over potential shortages”.
Labour and skill shortage aren’t top of the list of worries about how Brexit will affect the oil and gas industry though. The current political climate continues to cause challenges seeking investment across the economy and with the nature of the relationship between the UK and EU after Brexit remains unclear, it’s hard to say what impact this could have on the oil price.
New Players and Collaboration
We’ve seen structural changes across the industry. In the UK, some of the biggest names, including ConocoPhillips, Chevron and Marathon, have been selling off mature or ageing assets to smaller, often privately equity-backed, operators.
Development and exploration of the UKCS relies on these new players. According to Oil and Gas UK’s 2019 economic report, the basin is attracting new investment with around $5.5 billion M&A activity in the first half of the year.
The wave of investment across the basin is being welcomed by E&Ps and supply chain alike. New entrants are likely to require more support but they’re also more open to collaboration and new ways of thinking.
Progress has been made across the industry, but the worry is that collaboration begins to stall. Collaboration between operators and the supply chain is crucial, but they need to be mutually beneficial. The OGUK said, “there are persisting challenges, particularly around the enduring sustainability of the supply chain, which also needs to view the UK as a good place to invest.”
Vision 2035: Obtaining Net-Zero
The last 12 months saw a significant increase in societal changes towards the environment. There is no denying global warming and the world is taking a stand. This is apparent in the behavioural changes and technological and economic adaptions that we’re seeing across various industries.
The oil and gas industry is perfectly situated to deliver the UK’s ambitions of net-zero. With the right skills, resources and expertise, the industry can drive this initiative forward, supplying a secure energy source while contributing to reducing its carbon footprint.
A number of studies are currently underway, looking at the possibilities of wind farms or electrically powered installations in an attempt to reduce their carbon footprint. But, after years of attempting to develop and perfect carbon capture, there is recognition that more needs to be done (and invested) into this area for a net-zero goal to be met.
How does this affect you?
The Oil and Gas Industry’s Roadmap to 2035, commits to developing people and skills, including: “developing a diverse workforce with transferable skills” and “attracting 40,000 people, a quarter of which will be in new roles”.
As the industry moves through 2020, the foundations for the future needs to be set. A skills gap has been identified across the industry, particularly as it diversifies to consider investment and skills, and training should be considered early.
In addition, with a significant shutdown period happening in only a few months it is crucial that companies have identified their staffing requirements and are looking to fill these positions in advance of the shutdown beginning.
While it is crucial that the skills gap closes, it’s not just the responsibility of the employer to ensure that staff are upskilling. As many compete for roles, there’s an onus on the individual to consider their personal development as well. Throughout the downturn, training companies have changed their models to include finance options or discounts of block bookings.
Additionally, planning ahead is vital. For those working in contracted positions, be aware of end dates and contact recruitment companies in advance of your contract ending. Where this summer’s shutdown is concerned, be aware of the roles required throughout the period and apply early. Our recruitment experts are on hand to assist.