UK Oil and Gas Activity Supports Over 200K UK Jobs

Domestic oil and gas activity supported around 220,000 jobs in the UK last year.

That’s according to industry body Offshore Energies UK’s (OEUK) latest economic report, which was released this week.

“Around 133,000 of these were direct and indirect jobs in oil and gas companies and the supply chain,” OEUK stated in the report.

“The scale and complexity of oil and gas production make it reliant on the goods and services provided by a wide range of industries, with 36 sectors tracked by OEUK,” the organization added.

“These sectors, ranging from construction and steel manufacturing to transport, catering and professional services, are the source of indirect jobs,” it continued.

OEUK noted in the report that the sector’s impact extends far beyond the regional hubs of Scotland and the east of England.

“A further 86,000 jobs are induced in these regional economies that are only viable because of the benefits of the oil and gas sector in their community,” the report stated.

“This includes businesses and trades such as hospitality, shops and hotels,” it added.

The report highlighted that oil and gas production supported 93,600 in Scotland, 25,100 jobs in London, 18,800 jobs in the South East, 14,400 jobs in the North West, and 12,800 jobs in the East of England.

UK Economy

Alongside supporting around 220,000 jobs, the oil and gas sector is also a major contributor to the strength of the UK economy, OEUK stated in the report.

The industry generated almost $37.3 billion (GBP 30 billion) in the gross value added (GVA) in 2022, according to the report, which highlighted that over $28.6 billion (GBP 23 billion) of this is generated directly and indirectly by oil and gas companies and the wider supply chain.

More than $7.4 billion (GBP 6 billion) is induced by activity in communities across the country that is only viable thanks to the direct and indirect benefits of the oil and gas sector, the report said.

“Data from Office of National Statistics (ONS) and modelling the indirect and induced GVA contribution show that every $1.25 (GBP 1.00) of oil and gas expenditure leads to $2.87 (GBP 2.30) in value-added across the economy, on average,” OEUK stated in the report.

“This contribution makes the sector one of the most productive in the economy and shows how investment helps stimulate wider economic growth, benefiting every area of the UK,” it added.

Powering the UK

In a speech launching OEUK’s 2023 Economic Report in Aberdeen, which was posted on OEUK’s website, the organization’s CEO, David Whitehouse, said, “our domestic oil and gas sector has powered the UK for the last 50 years”.

“Today the offshore oil and gas sector supports around 220,000 jobs and in 2022 generated almost GBP 30 billion in gross value added – around 1.5 percent of the total UK economy,” he added.

“But the sector has delivered so much more. Our standard of living in the UK is, in part, what it is because of our sector. We continue to be a development ground for thousands of highly skilled jobs. Our standards are adopted globally. North Sea experience is seen as mark of quality across the world. We have built companies to be proud of,” he continued.

“We all recognize our future energy mix must change. Our sector, through the North Sea Transition Deal, was the first to sign up to a commitment to align with the UK’s net zero ambition. And we are in action reducing emissions in preparation for the future,” Whitehouse went on to state.

In his speech, Whitehouse noted that “we need to support both oil and gas and renewable energy”.

“Increasingly these are the same companies and people,” he added.

“The debate is not what we just stop, but what we must start. I have heard some who say, we need to stop the investment in oil and gas, so that the supply chain can focus on renewables,” he continued.

“The truth is the bulk of companies investing in opportunities like floating offshore wind, hydrogen, CCS and decarbonizing our economy will require the cashflow from a stable and predictable oil and gas business to fund these opportunities,” Whitehouse stated.

GHG Emissions

In a statement posted on its website this week, the UK’s North Sea Transition Authority (NSTA) said greenhouse gas emissions from UK offshore oil and gas production were cut for the third consecutive year in 2022 “as industry continued its drive to reach net zero by 2050”. 

“Last year’s estimated three percent reduction contributed to a 23 percent drop in greenhouse gas emissions between 2018 and 2022, according to the latest Emissions Monitoring Report from the NSTA,” the organization noted in the statement.

“This industry remains well on track to meet targets to cut emissions 10 percent by 2025 and 25 percent by 2027, as agreed in the North Sea Transition Deal with the UK government in March 2021,” it added.

“However, bold measures will be required to hit the key target of halving emissions by 2030 – the absolute minimum the NSTA expects from industry, which must strive to surpass this goal,” the NSTA continued.

In a statement posted on OEUK’s site commenting on the NSTA’s update, OEUK Sustainability and Policy Director, Mike Tholen, said, “the emissions progress announced … is a clear indicator that the UK offshore oil and gas industry is committed to its mission, already surpassing its 2025 goal of a 10 percent reduction”.

“But this is the decade of delivery, not complacency. Our challenge now is to ensure the energy sector receives enough investment and the right long-term energy policy to significantly scale-up the solutions needed to meet the real challenge ahead; halving emissions by 2030 and achieving net zero by 2050,” he added.

Mid-2030s

In the statement, Tholen noted that “by the mid-2030s, oil and gas will still provide 50 percent of our energy needs”.

“Putin’s war in Ukraine has shown the risk of relying on other countries for energy, and domestic production on average is four times cleaner than imported LNG. The UK’s homes and businesses cannot yet do without these fuels,” he added.

“That is why it’s vital our North Sea reserves are produced as sustainably as possible, so we can continue to protect the nation’s energy security while reducing our carbon footprint and building the low carbon energies of the future,” he went on to state.

OEUK describes itself as the leading representative body for the UK offshore energy industries. It is a not-for-profit organization with a pedigree stretching back almost half a century, OEUK’s site notes.

The NSTA regulates and influences the oil, gas, and carbon storage industries, according to its website, which highlights that the organization helps drive the North Sea energy transition and holds the industry to account on halving upstream emissions by 2030.

To contact the author, email andreas.exarheas@rigzone.com