Has the oil and gas industry reached a turning point?

LAST week saw the release of the results of our 25th Oil and Gas Survey, as the industry prepares to enter the third year of the current low oil price period.

It revealed something of a mixed picture, with the longest period of low confidence levels - both here and overseas - since the survey began in 2004, but it also highlighted a positive movement in confidence.

The facts: investment has fallen around 40% from its 2014 peak alongside low levels of exploration.

Industry body Oil & Gas UK estimates that the sector is now supporting around 120,000 fewer jobs than just two years ago.

The fall-out from the sector downturn continues to resonate across the wider Scottish economy. Scottish growth was just 0.7% over the past year, compared to 2.2% for the UK as a whole.

Unemployment claimant count rates have increased in Aberdeen City, Aberdeenshire, Moray, Orkney and Shetland over the past year too.

But findings suggest that we may already have reached, or be close to reaching, the bottom of the downturn with 65% either believing this has already happened or predicting it will over the next 12 months.

A year may take its toll on some companies, though.

For the majority of firms, planned job reductions seem to be coming to an end and 2017 is forecast to be a better year for employment.

But it is what is unexpected that might be our biggest risk, and the recent OPEC decision will have little short term benefit.

There are welcome indicators and this may suggest some light at the end of the tunnel.

We should be mindful however that “the bottom” is a somewhat subjective term, with some businesses beginning to recover and others still facing tough times ahead.

The external environment is “busy”, for example around Brexit, but it is vital that policy makers are not diverted away from the critical issues facing the sector.

The Chancellor reiterated his support for the oil & gas industry in the Autumn Statement, and he went on to talk of supporting innovation, research and development and productivity, which was welcome.

It is clear that companies are striving to become fitter, leaner and they are working hard to look for new markets to secure their future and employment levels where that is within their control.

There is no question of complacency in the North-east and our brilliant people will continue to demonstrate that the oil and gas sector should be considered a success story in generating economic value for the UK economy.