Job fears mount as oil and gas firms cut North Sea spending

The Herald Scotland

12-05-2025

Concerns have intensified amid the plunge in oil and gas prices that has followed Mr Trump's decision to impose tariffs on more than 50 countries.
Brent crude fell from $75 per barrel on the day he announced the plan in April to a four-year low of $58.60/bbl a week later.
The price has fluctuated wildly since as the president has appeared to amend his plans on the hoof in response to the concerns of politicians and investors around the world.
Brent crude rose 3%, to $65.76/bbl, in morning trading after the US and China agreed a deal to reduce tariffs for 90 days.
However, uncertainty about Mr Trump's longer-term intentions could weigh on the global economy for months. Members of the Opec+ exporters group, which includes Saudi Arabia and Russia, added to the pressure on crude prices last week when they agreed to increase output significantly.
Signs that the market ructions will have a damaging impact on the North Sea have become increasingly clear.
Last week one of the biggest producers in the North Sea, Harbour Energy, announced plans to shed 250 jobs in a move it said would result in at least a 25% reduction in headcount.
The Aberdeen-based group highlighted market volatility and said it was taking mitigating actions to offset the impact of lower commodity prices.
It also cited the impact of fiscal and regulatory uncertainty in the UK. The Labour Government increased the rate of the windfall tax in October and has said it will not issue exploration licences covering new areas. The regulatory assessment process for new field developments is under review.
James Reid, senior research analyst at the Wood Mackenzie energy consultancy said uncertainty about the outcome of that review was deterring firms from investing in pre-production projects.
A consultation process regarding the North Sea fiscal regime ended last month.
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Mr Reid said a range of firms say they have hoppers of opportunities that they want to get after but won't move until supportive fiscal and environmental regimes are in place.
Harbour axed 350 jobs in Aberdeen in 2023 a move it blamed on the introduction of the windfall tax by the former Conservative Government.
Other significant North Sea players have found their plans unravelling since Mr Trump dropped his tariff bombshell.
On March 7 Serica Energy and EnQuest announced they were in talks about combining their operations in a move they said would provide a platform for growth in the area.
Early this month, however, the companies abandoned the talks.
'In light of current market volatility an agreement on terms that would have been in the best interests of shareholders was not possible at this time,' said Serica.
The ending of the talks left question marks hanging over both firms. The deal would have been structured as a takeover of Serica and may have been seen as signalling that the company's directors were ready to listen to offers.
Shares in Serica have risen strongly since the deal talks ended. EnQuest shares have fallen.
Mr Reid at Wood Mackenzie said some firms might decide that the current uncertainty creates opportunities in what would probably be seen as a buyers' market.
Viaro Energy has shown it has the appetite to acquire and invest in North Sea assets in recent months.
The fall in commodity prices could give fresh impetus to a process of upheaval in the North Sea which looks set to have a transformational impact on the operations of majors in the area.
In December Shell and Equinor agreed to combine their North Sea operations, months after Eni and Ithaca Energy agreed a similar deal.
BP has yet to respond as it looks to fend off reported bid interest.
With chief executive Murray Auchincloss under pressure to boost BP's flagging share price, giants are thought to be mulling bids for the firm.
The FT reported that Shell, ExxonMobil, Chevron, TotalEnergies and AdNoc of Abu Dhabi have been running the rule over BP, citing unnamed industry sources and advisers.
A takeover of BP could result in huge job losses in the North Sea and Aberdeen. Any acquirer would expect to achieve significant cost synergies.
Even if BP escapes the attention of predators the firm will likely step up efforts to cut spending.
Shell chief executive Wael Sawan has highlighted the potential to use AI to help reduce the number of people it needs to complete projects.
The impact of the consolidation process will be felt across the wider supply chain, which is already being squeezed.
One of Scotland's leading oil services firms is facing a crucial week amid the prospect that it could soon surrender its independence.
Wood group is the subject of a £240m takeover bid by Sidara of Abu Dhabi, which has until 5pm on Thursday May 15 to decide whether it will make a firm offer.
Sidara decided to walk away after making a £1.5bn bid in August last year.
The outcome of Sidara's latest deliberations is likely being awaited anxiously by around 4,500 people working in the North Sea operations that Wood runs mainly out of Aberdeen.
Last month Wood directors said they would recommend that shareholders accept an offer on the 35p per share terms proposed.