OIL and gas professionals expect the sector to commit to greater investment in the coming year as industry confidence rises, a new report says.
However, Norwegian advisory group DNV GL warned there were signs that the industry’s old spending habits were returning as companies relaxed their grip on costs and service firms pushed up their rates after years of being squeezed.
It said that while more companies expected to grow their workforce in 2019, compared to four years ago, skills shortages and an ageing workforce have resurfaced as major concerns.
The report highlights the growing challenge of addressing the industry’s attractiveness to young talent, who may view it as unstable and environmentally unsustainable.
A DNV GL poll showed a third (36%) of senior oil and gas professionals expected increased research and development spending this year.
“The global oil and gas industry is entering 2019 with renewed optimism and a greater sense of resilience,” said Liv Hovem, CEO of DNV GL – oil and gas. “Despite greater oil price volatility in recent months, our research shows that the sector appears confident in its ability to better cope with market instability and long-term lower oil and gas prices.
“For the most part, industry leaders now appear to be positive that growth can be achieved after several difficult years.
“While increasing optimism and expectations for higher spending are to be welcomed, there will also be new challenges for the sector this year.
“The industry’s resolve to maintain the efficiencies established during the recent market downturn will be tested as the sector relaxes its focus on cost control, and signs of supply chain inflation and skills shortages emerge.”
The report was welcomed by industry body Oil & Gas UK (OGUK), which has long-term aims for the sector enshrined in its Vision 2035 project.
Its market intelligence manager, Ross Dornan, said: “This report builds on our analysis showing the positive future ahead if we continue to strive towards Vision 2035.
“OGUK will add more detail on the many exciting future opportunities for our industry in our flagship Business Outlook Report to be published in March this year.”
However, he cautioned: “We cannot afford to return to a position of cost escalation and instability seen previously.
“Through OGUK’s efficiency task force, industry is focused on driving further efficiency improvements, without which the basin will become less competitive.
“We have already seen the sector delivering improved performance, securing more project approvals in 2018 than in the last three years combined. Our challenge is to build on our successes to generate increased exploration activity.”
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