Aberdeen's oil bonanza is over as thousands of jobs are axed

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The Independent Online
ABERDEEN WAS warned yesterday that 10,000 oil and gas jobs could disappear in the next decade.

The prediction, in a report by Aberdeen City and Aberdeenshire councils, furthers the city's reputation for bucking the national economic trend. More immediately, it has dire implications for the Dallaslifestyle still enjoyed by many in the oil capital of Scotland.

Aberdeen has reversed national economic moods since the discovery in 1971 of the Forties field. This saved it from the economic woes of the oil-price shock of 1973, which so damaged the rest of the UK economy. And during the 1981 recession, Aberdeen was thriving as North Sea oil and gas contributed more than 4 per cent to the UK's gross domestic product.

When house prices slumped in the rest of the UK from 1989 to 1993, they rose in Aberdeen by 35 per cent, said Malcolm Shepherd, vice-chairman of the Aberdeen Solicitors Property Centre. "There are so many peripheral industries dependent on oil that when it is doing well, everyone does well and it shields us from the rest of the economy. Of course when oil is suffering we all suffer," he said.

In the period from 1985 to 1988, when the rest of the country enjoyed the so-called "Lawson boom", the oil industry was in the doldrums and house prices were falling in Aberdeen by 10 per cent a year. "People were so desperate they just handed in their keys at the bank and said, `Do your best,'" Mr Shepherd recalled.

By the early 1990s, however, the Granite City was famed for the number of well-heeled women, the wives of oil workers, to be seen shopping in Calvin Klein on Union Street, or jetting on shopping trips to the big New York department stores. Now, as the future looks rosy for the rest of the UK, a quarter of the area's oil and gas jobs could go in a decade, says the councils' report, leaving just 30,000 employed in the industry compared with 54,000 in 1991.

The prediction follows other indicators of trouble in Aberdeen: the town has Scotland's highest burglary rate, and air passenger numbers have fallen by 9 per cent in the past year, while the rest of Scotland has seen an air- travel boom.

The immediate cause is last year's slump in world oil prices, which also explains the announcement this week by Kvaerner, the engineering giant, to cut 3,000 jobs worldwide in its oil and gas divisions.

More than 2,000 oil jobs have disappeared in Scotland's offshore industry already this year. Marathon Oil cut more than 500 jobs in May while another 100 went from Noble Drilling, and 80 at Amec Process and Energy. However, given that oil prices have recovered from their December low of $10 a barrel, and doubled since the beginning of the year, yesterday's predictions reflect a more fundamental restructuring and scaling down of the industry.

Analysts say that the industry is keen to make cutbacks, despite the price recovery, so that it is better able to face international competition.

Yesterday's report does, however, predict that oil and gas will be part of the indigenous local economy well into the next century. The length and health of that local sector will depend, it says, on decisions taken on future field development, as well as the political framework set up by the Government.

Len Ironside, the leader of Aberdeen City Council, said: "We are obviously concerned at the job losses in the last couple of years, and have been involved in work to help minimise the impact of those losses. Yes, the market is a tough one, especially overseas, but one which companies in Aberdeen and the North-east are capable of taking on."

Against The Trend

Average House Prices

Aberdeen UK

1971 Pre oil boom pounds 4,166 pounds 6,130

Aberdeen depressed

1982 UK recession pounds 32,432 pounds 25,553

Aberdeen booming

1985 UK recovering pounds 41,025 pounds 33,188

Aberdeen booming

1989 Oil Slump pounds 46,850 pounds 62,135

Boom in SE of UK

1992 Aberdeen booming pounds 64,400 pounds 64,300

UK slump