• 10 hours Shell Oil Trading Head Steps Down After 29 Years
  • 14 hours Higher Oil Prices Reduce North American Oil Bankruptcies
  • 16 hours Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 17 hours $1.6 Billion Canadian-US Hydropower Project Approved
  • 19 hours Venezuela Officially In Default
  • 21 hours Iran Prepares To Export LNG To Boost Trade Relations
  • 23 hours Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 1 day Saudi Oil Minister: Markets Will Not Rebalance By March
  • 1 day Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 2 days Rosneft Announces Completion Of World’s Longest Well
  • 2 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 2 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 2 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 2 days Santos Admits It Rejected $7.2B Takeover Bid
  • 2 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 2 days Africa’s Richest Woman Fired From Sonangol
  • 3 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 3 days Russian Hackers Target British Energy Industry
  • 3 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
  • 3 days DOJ: Protestors Interfering With Pipeline Construction Will Be Prosecuted
  • 3 days Lower Oil Prices Benefit European Refiners
  • 3 days World’s Biggest Private Equity Firm Raises $1 Billion To Invest In Oil
  • 4 days Oil Prices Tank After API Reports Strong Build In Crude Inventories
  • 4 days Iraq Oil Revenue Not Enough For Sustainable Development
  • 4 days Sudan In Talks With Foreign Oil Firms To Boost Crude Production
  • 4 days Shell: Four Oil Platforms Shut In Gulf Of Mexico After Fire
  • 4 days OPEC To Recruit New Members To Fight Market Imbalance
  • 4 days Green Groups Want Norway’s Arctic Oil Drilling Licenses Canceled
  • 4 days Venezuelan Oil Output Drops To Lowest In 28 Years
  • 4 days Shale Production Rises By 80,000 BPD In Latest EIA Forecasts
  • 5 days GE Considers Selling Baker Hughes Assets
  • 5 days Eni To Address Barents Sea Regulatory Breaches By Dec 11
  • 5 days Saudi Aramco To Invest $300 Billion In Upstream Projects
  • 5 days Aramco To List Shares In Hong Kong ‘For Sure’
  • 5 days BP CEO Sees Venezuela As Oil’s Wildcard
  • 5 days Iran Denies Involvement In Bahrain Oil Pipeline Blast
  • 7 days The Oil Rig Drilling 10 Miles Under The Sea
  • 8 days Baghdad Agrees To Ship Kirkuk Oil To Iran
  • 8 days Another Group Joins Niger Delta Avengers’ Ceasefire Boycott
  • 8 days Italy Looks To Phase Out Coal-Fired Electricity By 2025
Alt Text

New Battery Design Could Crush Tesla

Elon Musk’s old rival, Henrik…

Alt Text

The Surprise Winners Of The Oil Price Rally

The recent rally in oil…

Alt Text

The Dangers Of A Bullish Oil Market

Geopolitical tensions continue to threaten…

Chris Smith

Chris Smith

Chris Smith is a Glasgow based writer and blogger. He writes extensively about finance on his website, Spend It Like Beckham. His articles about modern…

More Info

North Sea Oil Town Hit Hard By Low Prices

North Sea Oil Town Hit Hard By Low Prices

2016 is proving to be another difficult year for North Sea Oil. In March, former chairman of energy services company Wood Group, Sir Ian Wood, said the oil and gas companies located in the UK’s North Sea region could let go of a further 45,000 employees in 2016. 65,000 jobs have already been lost in the sector since the oil price collapsed from a high of $115 in 2014 to $30 a barrel.

Against falling prices, oil production continues to rise globally, led in part by Russian, Saudi, and U.S. producers. However, while all producers face the question of sustainability, producers in the UK face a great many other challenges as well. Crude oil output in the UK has fallen 25 percent in the past 5 years and more than 60 percent since 2000, with North Sea producers seeing some of the biggest declines, losing nearly 70 percent of output in the last 15 years and 40 percent in the last five. Related: Russia And Saudi Arabia Locked In Relentless Fight Over China's Oil Market

A decline in oil processing has led to a decrease in profits for oil and gas companies, which have in turn tried to slash their costs through job cuts. With layoffs at their most rampant since 2004 the UK and Scottish governments have been drawn in to pouring more than £500m of extra investment into Aberdeen to help it cope with the economic impact of the collapse in global oil prices.

Ministers from both Scottish and UK governments signed a “city deal” in January promising £250m from the UK government to be spent on energy research, infrastructure and upgrading the city’s harbour, with a further £254m from the Scottish government to improve rail links, roads, housing and broadband services in the Aberdeen area. Related: Venezuela’s Electricity Blackout Could Cut Off Oil Production

Aberdeen is synonymous with the North Sea Oil industry, and it is here in Scotland’s ‘Dallas of the North’ that the impact of the oil price fallout is being felt the most. Hundreds of workers in the oil industry are being laid off every week by producers, drillers and service companies which in turn is hurting local businesses, from estate agents, to hoteliers and taxi drivers.

Redundancies are made worse by the fact that the cost of living in Aberdeen is still high. It is a city where wages have often been higher than the UK average, a place that boasts the highest concentration of millionaires in the UK, and before the crash, an unemployment rate of just 2 percent.

Spiralling inequality in the years preceding the fall in oil price has laid bare the cliff edge that Aberdeen has been balancing on for so long. In December the number of people claiming out of work benefits in the north-east of Scotland increased by 72 percent. Dependence on food bank services in the city has also seen a sharp rise in stark contrast to the way things were just a few short months before. Related: Can Oil Continue To Rally Like This?

As the industry continues to falter, a large majority of UK oil and gas workers are now considering looking for work abroad. A survey by recruitment group Oil and Gas People found that more than 70 percent of North Sea workers would consider moving overseas, where they believe they will find better job security and conditions, with higher wages also stated as a main reason for looking abroad. A move that doesn’t come without new risks and could be costly in itself without first acquiring the proper safety qualifications and insurance cover.

Despite the inevitable decline in North Sea production, the future for the UK oil and gas supply chain remains vibrant due to a number of strengths. As recently as last week Scottish energy services company Wood Group announced a $150 million deal to help support key operations in the North Sea. The deal, an extension of a contract with Nexen, a subsidiary of China National Offshore Oil Corp, means that 190 jobs will be retained in the region. This lifeline is hopefully the beginning of the recovery for the North Sea oil industry with companies still willing to invest despite crude oil prices still about 60 percent below peak levels two years ago.

By Chris Smith for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News