Britain's oil and gas industry has set its sights on growth as cautious optimism returns to the sector, new research suggests.
Business confidence in the sector has grown in the last year. The net balance of firms that felt optimistic sat at 39 per cent, up from just two per cent in 2016, according to the sixth annual Bank of Scotland oil and gas report.
Despite the drag of low oil prices, more than half (58 per cent) of companies are anticipating growth. On average, those firms are expecting growth of 26 per cent of their current annual turnover in the next 12 months.
“While the blow from depressed oil prices has been severe for the many businesses and individuals impacted by job losses, the oil and gas sector is proving itself to be among one of the most resilient in the UK," said Stuart White, Bank of Scotland regional director for mid markets north of Scotland.
“The expression of confidence in this year’s survey reflects an industry that appears to be turning a corner, with conditions for growth more favourable than they have been in recent times."
The survey also found job cuts in the industry appear to be tapering off. The percentage of firms anticipating job cuts in the next year is down from a third (32 per cent) in 2016 to a fifth (19 per cent) this year. Meanwhile, more than half (55 per cent) of companies said they expect to increase their overall headcount over the coming year.
“There are still choppy waters to navigate, with political uncertainty at home and abroad, but we remain confident in the sector, and are committed to providing the support it needs as part of our pledge to help Britain prosper," White said.
The sector is still anticipating challenges in the year ahead. The rising cost of production (48 per cent), value of the pound (44 per cent), volatility of current exchange rates (41 per cent) and uncertainty caused by EU exit negotiations (35 per cent) remain as the biggest challenges for the industry, according to respondents.
Cost challenges were expected to be met by adopting new processes, embracing new technology and making day-to-day operational efficiencies.
Paul de Leeuw, director of the Oil and Gas Institute, said: “With the oil price more than halving since 2014, the industry had simply no choice but to focus on adjusting its cost base and improving operating efficiency. The relentless focus on cost and efficiency inevitably moved the agenda towards short-term delivery.
“This year’s survey is showing a more positive outlook for the UK oil and gas industry. Building on the cautious optimism reflected in the survey, it is encouraging to see that many companies are looking again at returning to profit, growing their business and recruiting new staff.”