The UK oil & gas industry is undergoing a transitional period as the energy sector moves towards cleaner sources of energy. Since the millennium, the North Sea oil & gas industry has been slowly declining, with output falling 75% from its peak in 1999.

Despite this shift towards green energy, oil and gas remain an important electricity source. It accounts for over 30% of our power generation and will continue to play a vital role in our energy generation for decades to come.

At the same time, the industry is experiencing significant oil & gas workforce challenges. Widening technical skills gaps are impacting the industry’s ability to meet operational targets and effectively manage the ongoing energy transition.

What is the state of the UK oil & gas industry?

Whilst the overarching focus for government incentives has been to boost green and clean energy sources, the UK oil & gas industry will still be a major player in the UK energy sector for decades to come.

In November last year, the UK government announced a plan for the future of the North Sea, citing a need to “secure its long-term future”. This includes supporting existing oil and gas fields for the remainder of their lifespan, but not issuing new licenses for further fields or for more infrastructure to develop. They have also discussed the need to support the oil & gas workforce when they eventually need to transition to alternative industries or areas of energy.

What factors are causing the oil & gas industry’s workforce challenges?

The UK oil & gas industry is facing several significant workforce challenges that are putting pressure on oil & gas firms’ ability to operate efficiently and manage the transition to greener energy sources.

Uncertain future

Ongoing changes to government policy, licensing, plans and investment for the North Sea are making the industry less attractive for potential newcomers to the industry and existing workers.

Mixed messaging about the future of oil & gas in the UK energy system and if it’s a viable career long term has created hesitation among professionals considering whether to enter the industry. This poses substantial recruitment problems for an industry that desperately needs to fill vital skills gaps and build a talent pipeline for the future.

Ageing workforce

Additionally, the ageing oil & gas workforce is one of the most pressing issues in the industry. Currently, 41% of the workforce is aged 50 and over, a figure that is expected to rise over the next few years. As these workers retire or leave the industry, there is a significant risk of losing vital skills, knowledge and experience that could disrupt operations.

With only 12% of the oil & gas workforce under the age of 30, more needs to be done to encourage younger workers to plug the ever-growing skills gap. However, due to a sizeable number of candidates being unsure about the longevity of the industry, there is a hesitancy for young workers to replace the exiting workforce.

Global competition

Booming oil & gas markets in the Middle East, North America and Africa are enticing existing UK oil & gas workers to move abroad. Many areas are offering higher salaries and increased opportunities, and in some locations, such as the Middle East, there are attractive low-to-no-tax rates. Tax is a particular area of contention among the oil & gas workforce, as the majority of oil & gas fields in the UK are located in Scotland, which has the highest tax rates in the UK.

In an ageing workforce with significant skills shortages, the loss of experienced workers to opportunities overseas presents a large problem for the UK industry.

Changing technology

A growing skills gap has been caused by the increase in technology used in the oil & gas industry. Firms are implementing AI and automation, as well as undertaking digital transformations to drive efficiencies and improve sustainability.

Key technology skills in data, AI, and cyber security are becoming essential for oil & gas organisations to stay ahead. Some organisations are now exploring ways to upskill their current workforce to meet digital requirements and plug skills gaps internally. But to successfully fill all these skills areas, there is a growing need to attract tech professionals to the oil & gas industry.

What does the oil & gas industry need to do to combat these challenges?

In order to fill skills gaps and ensure operational efficiency stabilises, industry leaders needs to take proactive steps to secure the future of oil & gas.

Increase apprenticeships

Widening the options for how professionals can enter the industry is one way organisations can secure the future talent pipeline. This includes offering apprenticeships to school leavers and training programmes for those wanting to make a career pivot.

Outreach to universities, schools and colleges is important in forming an approach to attracting fresh talent to the workforce.

Focus on upskilling

As digitalisation and automation continue to shape the industry, upskilling opportunities for existing workers can help to improve employee retention and fill certain skills gaps. Development opportunities through digital skills and data analysis can help the oil & gas workforce adapt to changing operational needs.

Review compensation packages

In order to reduce the number of workers leaving the industry, either to join a new sector or work abroad, regularly reviewing compensation packages will help boost the oil & gas workforce.

Organisations need to invest in benchmarking salary and benefit packages to ensure that their offerings are competitive, not just within the oil & gas industry but also in equivalent sectors. This is particularly important in roles such as engineering, technology and finance, where professionals may work across several industries.

Promote diversity

A lack of diversity within the current oil & gas workforce also needs to be addressed in order to secure future talent pipelines. More shockingly than the fact that only 14% of the oil & gas workforce is women, the most recent stats researching ethnicity produced in 2021, found the workforce to be 97% white as well.

The sector needs to ensure it is working at increasing diversity in the industry through targeted campaigns and changing internal culture, so that the potential talent pool for businesses can expand, and the sector can fill vital skills gaps.

Support for finding alternative work

As the landscape changes, many in the oil & gas workforce want support if their roles become redundant in the future. A recent study found that 89% of oil & gas workers want the government to mandate that businesses provide pathways to other industries, and 92% want a job guarantee and financial help if they are unable to find an equivalent, alternative job.

Going forward, in order to attract great talent to the oil & gas workforce, businesses need to reassure candidates and employees about future job security and include clear support measures for employees whose jobs will be impacted by the energy transition.

A shifting landscape

Overall, as the oil & gas market landscape continues to evolve over the next few decades, the oil & gas workforce faces a range of complex challenges. This includes filling vital skills gaps, securing the future talent pipeline, and providing structured support for professionals when production declines.

For help in supporting your oil & gas workforce targets, VIQU Energy is an oil & gas specialist recruitment agency with the expertise to secure great professionals for your business. Click here to get in touch.