Net zero remains a non-negotiable for the country, for business and for society. The journey of the offshore oil and gas sector towards a greener future isn’t a new one, and with oil and gas likely to remain a vital part of our energy mix for decades to come, we still have some distance to go.

At the start of this year, rising gas prices were exacerbated by the war in Ukraine, driven by a combination of strong demand from China and Western oil majors cutting back on exploration and production.

In recent months we’ve seen global leaders, including in the UK, commit to opening new sites for drilling to achieve long term energy security. This makes sense, so long as it is part of a co-ordinated transition plan and within the framework of the overall carbon budgets. But locking us in for long-term fossil fuel-based generation cannot be used as a panacea in the current energy security crisis. And the oil and gas industry understands that all too well.

The Energy Transition Survey, which KPMG UK proudly sponsors – has followed Scotland’s energy sector through boom times and bad times over the years. As you’ll read in the 36th edition of the survey, the sector is buoyant and has a positive outlook on future revenue, headcounts, and frequency of work.

However, a big concern for companies operating in the North Sea is access to skills and labour - one of the most important pieces in the energy transition puzzle. The sector continues to lose people, although we are seeing growing trends of people moving from hydrocarbon-intensive to clean energy roles. There is also increasing investment flowing into national education systems to upskill a greener workforce of the future, although clearly, this will take some time to flow through to the labour pool.

Skilled workers have become almost as precious a commodity as the energy they produce. And our latest research suggests this problem is only going to become more acute – with firms we surveyed clearly concerned about how to attract new people from outside the industry to work in the sector.

Those firms who can demonstrate their willingness to embrace the energy transition and their desire to flourish in the economy of the future will find that retaining and attracting talent will not be as challenging.

Indeed, what companies do now across the three ESG strands of environmental, social and governance will determine the talent they attract, the customers they serve, the profits they make, and ultimately the impact they will have on society.

The direction of travel is clear amongst oil & gas firms. They are expecting their businesses to transform substantially and at pace across the next decade. The firms we surveyed predict that, on average, the share of their business outside of oil and gas will jump to 47% by 2030.

With the growing demand to support North Sea offshore wind development via leasing rounds, as well as traditional decommissioning projects, the work will continue to grow and vary. Indeed, in this survey, we found that offshore wind activity had overtaken decommissioning as the second biggest activity outside of oil and gas.

Most of the sector believes that strong energy transition credentials are critical to their long-term success. Despite this, the survey tells us that more than a third of
companies have yet to develop a net zero strategy, and three in ten still have no plan to change. Most pure play oil and gas exploration and production companies are addressing their own carbon footprint. But for those without a blueprint for transition, and where external stakeholders are increasingly looking for substantive transition plans, the clock is ticking.

Keeping both eyes firmly on the future and the goal of net zero – underpinned by strong ESG actions - will allow those operating across the UKCS to prosper as major players on the global stage and continue the region’s long tradition as an energy powerhouse in the UK and beyond.