Growth in the oil & gas industry will lead to thousands of new jobs, more orders in the supply chain and fresh revenue streams, according to a major new report on the sector’s short term prospects from Lloyds Banking Group.
The Lloyds Bank Corporate Markets report, Oil & Gas: Rising Fortunes, suggests that 75% of oil & gas companies expect to create new jobs in the next two years, with over a quarter of firms (28%) aiming for a major employment push by recruiting over 500 staff.
And that employment will be driven by consistent growth in the oil and gas industry. The Lloyds Bank Corporate Markets research shows that 87% of senior decision makers within the sector say they are on track for growth in that two year period.
A similar proportion (83%) are also expecting to increase orders through the supply chain next year as the ripple effects of handling more business are felt throughout the industry, the report suggests. Lloyds Bank Corporate Markets estimates that just a three per cent rise in order values from oil & gas companies would result in a further £398.4 million in revenue for the supply chain next year.
Oil and gas companies are also embracing the green economy. According to Lloyds Bank Corporate Markets, 26 per cent of firms in the industry have already created a new income stream through renewables, and the number of oil and gas businesses adopting green income streams will jump to a third (33%) by the end of 2012, and to over half (55%) in the next three to five years.
Alasdair Gardner, Managing Director for Lloyds Bank Corporate Markets in Scotland, said: "The net result of larger contracts and more orders for products and services is more jobs. Oil and gas companies already know they will need more capacity to handle the extra business coming their way next year and that is heartening news for the economy and for the jobs market. The strategic importance of Aberdeen as an oil and gas centre of excellence should translate into jobs in the North of Scotland, particularly.
"While market consolidation and technological innovations are creating new opportunities for oil & gas companies at home, emerging markets around the world are now realising their potential – so growth in the sector will come in many guises.”
Oil and gas extraction businesses and the support sector have both expressed above-average confidence in creating employment, while refining and manufacturing businesses have most uncertainty surrounding their prospects for increasing their workforce. According to senior decision makers in the industry, the greatest barrier to growth is the lack of a highly skilled workforce, with 46% of respondents citing a dearth of industry talent as an impediment to growth.
Aberdeen-based mechanical engineering services business Enermech, which has secured over £24 million worth of funding from Lloyds Bank Corporate Markets in recent years, has doubled the size of its workforce in 2011 and aims to capitalise on its reputation in all the major international oil and gas hubs as new contracts become available.
Doug Duguid, Managing Director of EnerMech, said: "We have been recruiting heavily in 2011 and have already doubled the size of our workforce. The findings of this report reflect our experiences and we certainly count as one of the companies expecting growth next year.
"We want to create more jobs – the issue is finding the skilled staff we need to meet demand for our services. We are recruiting skilled workers for all our service lines in the offshore industry but some disciples are difficult to find, for example the number of hydraulics and valve technicians available in the marketplace is not high. The industry must put a focus on training and apprenticeships if we are to meet the full potential suggested in this report.”
Lloyds Bank Corporate Markets has also revealed that in 2011 it provided more funding to the oil and gas sector than any other, including some of Scotland’s most high profile transactions such as Global Energy Group’s purchase of Nigg Yard and Wood Group’s $1 billion acquisition of PSN.
Alasdair Gardner added: "Our teams around the country have seen a huge amount of activity this year in the oil and gas sector and we know of many businesses that are well placed to capitalise on the industry’s growth prospects. Funding is available for businesses with the right plans for the future and we are proud to provide such substantial support to Scotland’s corporate community.”