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December 1, 2013

Scottish independence would weaken North Sea industry: report

The North Sea oil and gas industry would mainly be hit by several factors, including a lack of information on Scottish independence, a lack of skills in vital areas and increasing inflation rates, delaying investment and future productivity, a report has revealed.

By admin-demo

The North Sea oil and gas industry would mainly be hit by several factors, including a lack of information on Scottish independence, a lack of skills in vital areas and increasing inflation rates, delaying investment and future productivity, the latest report has revealed.

The Scottish referendum on independence is a major issue influencing the future of the oil and gas industry, according to the 19th Oil and Gas Survey carried out by Aberdeen and Grampian Chamber of Commerce (AGCC) and funded by law firm Bond Dickinson.

These factors are impacting plans of 98% of contractors in the oil and gas sector and the recruitment process in the next 12 months.

About 58% of operators and 65% of contractors boosted their workforce last year, while the average salary for operators increased by 6.5% and 4.8% for contractors.

Three in four contractors and half of operators anticipate an increased overall workforce in 2014, with a mostly strong demand for permanent staff.

AGCC chief executive Robert Collier said the good news is that the sector and north-east continues to see record levels of activity.

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"This time, we are reporting our highest ever reported level of companies recruiting in the contracting sector," Collier said.

"This brings challenges around how vacancies will be filled but we fully expect the sector to meet these challenges and continue to deliver for the north-east, Scottish and UK economies."

Operators are experiencing hitches in recruiting managerial or professional employees and those in technical and skilled deals, the report added.

About half of all respondents lost core staff in 2013, while 50% claimed that losing employees to firms in other oil regions globally turned out to be a contributory factor to the loss and also lead to a 31% increase in sourcing staff from non oil and gas firms.

In addition, the survey revealed that a lack of clarity in business strategies could daunt investment in the industry, in the wake of the postponement of £10bn in development, which also included a £4bn offshore wind farm.

AGCC also revealed in its survey that the hydrocarbon output dropped by 14% last year, which is further expected to decrease by 8.5% by the end of the year, raising further queries concerning energy security and increasing energy prices.

Bond Dickinson oil and gas partner Kenny Paton said more and more of the company’s clients in oil, gas and other sectors are raising questions about implications of the result of the referendum, and this report provides more evidence that oil and gas businesses are concerned about the lack of information.

"The main concerns that we are being approached about involve personal and corporate tax issues and fiscal policies, but a yes vote could impact companies in a number of ways that they need to factor in to their business planning."

Being the home of a large part of the UK oil and gas industries, north-east Scotland is also critical to the Scottish and UK economy.

Scottish Financial Enterprise (SFE) chairman Ewan Brown warned that the separation of Scotland from the rest of the UK could prompt new financial rules and lead to ‘operational challenges’ on currency for several member firms.

"Under EU rules, an independent Scotland would become a new and separate regulatory jurisdiction," he told the Guardian.

"We can know now that the cost of this new and additional regulator will fall on the industry and that it will be measured in millions of pounds. Staff numbers will be counted in the hundreds – Malta has 200, Ireland 600. This is not alarmist – it is a dispassionate description of the factual position."

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