UK Oil and Gas Firms Taking a Hit from Scottish Referendum Uncertainty
The 20th Oil and Gas Survey, launched recently by the Aberdeen and Grampian Chamber of Commerce and the North East Chamber of Commerce (NECC), has revealed that the Scottish referendum is impacting on investment proposals and plans made by nearly half of all firms dealing in oil and gas. 45% have expressed concern about moving forward before the vote takes place, given the uncertainty of what is to follow.
The Pivotal Role of North-East Scotland
The importance of the north east within the oil and gas sector was highlighted further, with 13% of survey respondents considering the location as key to the procurement of goods and services. This figure, which emphasises the significance of the north east to the supply chain, suggests that securing sector-wide contracts and investments would be beneficial for the region.
Conducted independently by the Fraser of Allander Institute, the survey indicates that businesses within the oil and gas industry, which remains central to the economic well-being of the UK, feel greater confidence regarding the future of the UK Continental Shelf (UKCS) than was evident this time last year. However, the many challenges presented by the independence debate have sparked fears.
Furthermore, it seems uncertainty may be arising as a result of the referendum process itself rather than the implications of a ‘yes’ vote. Views on independence for Scotland are divided. 38% believe independence would have little impact upon the sector, 18% believe it would be positive, while 12% feel negative effects are inevitable. A third of firms have not been able to develop a clear view of the situation, which further underlines any uncertainty.
Positivity within the Sector
Despite concerns, Aberdeen & Grampian chief executive Robert Collier remains positive, pointing out that the response from the sector continues to be favourable. Investment overseas and in the UK Continental Shelf continues to increase. He stressed the importance of continued support for the north-east Scotland oil and gas industry and went on to say, “The shortage of skilled labour and loss of staff to competitors is a key challenge to the sector, and it is encouraging that so many companies are increasing their investment in staff training, as well as developing new markets and research and development.”
While there is without doubt some concern, there is also a belief within the industry that the uncertainties can be overcome. Managers and directors are generally of the opinion that growth can continue, despite the current difficulties. Ross Smith, director of policy at the North East Chamber of Commerce, is adamant that the impressive growth of recent years should not be undone by a lack of confidence.
Results of the survey offer insights into some of the main concerns of businesses within the oil and gas industry. What needs to happen now is for those on either side of the debate to pull together in order to better clarify how the sector will move forward after September, whatever the outcome.