In an annual survey of UK offshore businesses released Tuesday, the Aberdeen and Grampian Chamber of Commerce (AGCC) reports an uptick in positive sentiment relative to last year's historic lows. About 40 percent of firms surveyed expect that they will grow by January 2018, and over half say that the UK continental shelf oil and gas industry has reached the bottom of its recent decline.
Offshore industry players around the world have been hard hit by the drop in oil prices. Benchmark rates routinely exceeded $100 per barrel from 2011-2014, but a supply glut led to a collapse in the market, and oil bottomed out below $30 early last year. A slow recovery has seen prices rise once more to the $45-55 range, aided in part by an OPEC supply cut. These rates are high enough to induce shale oil producers to return to drilling, but they are not quite enough for a large-scale turnaround in the capital-intensive offshore industry. The northeast of Scotland has been especially hard hit by the downturn: its economy is highly exposed to the fluctuations in the offshore oil and gas sector, and unemployment has risen as contractors have been forced to lay off a significant part of their workforce.
But in the latest AGCC survey, these employers showed a rise in optimism: a quarter of those surveyed reported that they are working at optimal levels, and about 40 percent reported that they expect to grow this year. A net positive balance of 46 percent are confident about UKCS offshore activity, up from negative four percent six months ago, and about 40 percent say that they feel more confident now than they did at the same time last year. Nearly 80 percent said that they believe that the offshore industry has reached bottom or will reach bottom within one year.
While expectations about traditional offshore activity are improving, a portion of the improved sentiment may stem from contractors' hopes for offshore renewable energy and the growing decommissioning industry. Four out of five firms surveyed expect to be involved in decommissioning within 3-5 years, and about half expect to win business in the renewables industry.