Aberdeen could suffer devastating employment cuts say analysts, after warnings that the North Sea oil industry is “close to collapse” because of the dramatic fall in oil prices.
The Granite City was unaffected by the recent recession thanks to the rigs off its shores, but oil companies and service providers have started cutting staff after prices plummeted to $60 (£38) a barrel.
North Sea oil employs 30,000 people, but the Aberdeen-based Wood Group announced a pay freeze for staff, and a cut to contractors’ rates, on Wednesday. Apache, one of the area’s biggest producers, will impose a 10 per cent reduction on contractors’ wages from 1 January.
Robin Allan, a director of Premier Oil and chairman of the independent explorers’ association Brindex, told the BBC yesterday: “It’s almost impossible to make money at these oil prices... The adaptation is one of slashing people, slashing projects and reducing costs... and that’s painful for our staff, painful for companies and painful for the country. It’s close to collapse.”
Tony Mackay, an economist and consultant who is a former professor at Aberdeen University, said a decline in the oil industry was forecast over the next few years, but the collapse in oil prices will hasten it. “We will now see the UK oil and gas sector fall in employment until after the end of 2016,” he said.