Employment is forecast to rise again in 2006 to around 380,000 jobs, driven by expected growth in operating expenditure and some growth in spending on exploration, although this will depend on rig and labor availability.
The study, UKCS supply chain economic estimates, by economic consultants Experian for industry trade body, the UK Offshore Operators Association (UKOOA), highlights the major economic impact of the UK upstream oil and gas sector in terms of jobs and output.
Speaking after the reports launch at a UKOOA Energy Breakfast in Aberdeen today, UKOOA chief executive Malcolm Webb said: This report provides further evidence of the huge importance of the offshore oil and gas sector to the UK economy. It also clearly underscores the need for continued investment in the North Sea to maintain activity in the years ahead. Every one billion pounds spent by the oil and gas companies in the UK, on exploration, capital development and operations, is estimated to support in the region of 30,000 jobs and generates wealth in the wider economy.
Last year, total spend by oil and gas producers in the UK was £9.8 billion, which is expected to rise to over £10 billion in 2006.
In 2004, the sector supported 340,000 jobs in the UK: 31,500 directly employed in oil and gas companies; 223,000 indirectly employed in the oil and gas sector supply chain and 85,000 induced jobs from the spending of wages in the economy.
Scotland accounts for nearly three quarters (71 percent) of the direct jobs and just under half (43 percent) of total jobs, mostly concentrated around Aberdeen and the North-East. Twenty percent of total employment is found in London and the South East, which is home to many headquarter functions of oil and gas companies.
David Doig, chief executive of OPITO, the industry's skills training organization, who spoke at UKOOAs Energy Breakfast, said: There is now clear evidence of the industry employers working collaboratively to address workforce capacity and capability deficiencies. The recent Pinch Points initiative consulted with over 200 employing companies and resulted in seven pan-industry skills projects being commissioned for 2006. The projects will deliver mechanisms for replenishing the workforce across a range of disciplines.
In 2004, around £27 billion of GVA (Gross Value Added) is estimated to have been generated by offshore exploration and production activities, up from £20 billion in 2003. Additional GVA generated by oil and gas company spending in the supply chain last year is believed to be in the region of £8.1 billion.
Mike Bowyer, Halliburton's UK vice president, who also spoke at the Energy Breakfast, said: Over the past few years we have struggled to articulate the importance of the oil and gas industry to the UK economy. This report will assist us to demonstrate the value created in terms of jobs and gross value added and this will hopefully carry more weight with the political decision makers who have a huge influence in our future.
The UK Offshore Operators Association (UKOOA) is the representative organization for companies licensed by the British Government to explore for and produce hydrocarbons in UK waters. It has 37 members.
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