Two in five oil and gas firms plan to accelerate renewables transition



A new survey has found that two in five firms are planning to accelerate their transition from oil and gas to renewables, with the UK’s sector on the “cusp of transformation”.

Aberdeen and Grampian Chamber of Commerce (AGCC), in partnership with KPMG UK and the Fraser of Allander Institute, showed “fragile” optimism for the sector.

The 33rd Oil and Gas Survey revealed 75% of contractors anticipate moving into renewables work over the coming three to five-years – the highest level recorded since the question was first asked in 2015.

A total of 100 firms in the oil and gas sector, employing 27,400 workers in the UK and more than 183,000 globally, responded to the online survey in March 2021.

On average, respondents believe oil and gas will account for less than three quarters of their business activity by 2025 – down from the current average of 86%.

The findings, which cover the six months to April, show contractor confidence in the UK Continental Shelf has significantly improved from a net balance of -76% reported six months ago to +6%.

The AGCC expected the outlook to have worsened following their previous report in November, which reported the industry was in “turmoil”, with many firms planning redundancies.

The forecast reported six months ago had 58% of contractors expecting the outlook to worsen. However, almost half (49%) of contractors now say they plan to hire new staff in the next 12 months.

The total balance showed +41% in contractors’ current international confidence, up from the -61% reported six months ago and above the 10-year average of +27%.

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Around a quarter of firms (27%) have set their own carbon neutral target, with 3% already having achieved them.

Almost two fifths (38%) indicate that while they are committed to being carbon neutral, they have not set a deadline for achieving it.

The companies that have set a target range for achieving net zero are estimating to have achieved it by between 2030 and 2050.

The report also found this target was reflected in the procurement processes, with 37% of firms expecting to evaluate their suppliers’ carbon footprints when awarding or renewing contracts.

It found 56% of oil and gas firms citing environmental concerns, 51% seeking to increase their sustainability or longevity as a company and 50% driven to improve perceptions of their own business for the reason behind their drive to net zero.

The pandemic has led to a change in work culture, with 83% of firms saying they will consider more flexible working with 80% considering replacing some face-to-face activity with virtual equivalents.

More than two fifths (44%) said they will be accelerating their diversification away from oil and gas and 43% will be exploring a reduction to their office footprint.

Martin Findlay, senior partner at KPMG in Aberdeen, said: “As we emerge from the pandemic, we’re facing a new set of climate-related challenges.

“The common misconception is that oil and gas is the cause of much of the climate crisis we face, when it’s actually often the driving force behind a potential renewables revolution.

“The industry is on the cusp of transformation and much of our findings reflect the collective sense of anticipation – it certainly feels that in Aberdeen we are heading towards the ‘new normal’ after a long period of reliance on carbon-based energy sources.”

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