Nearly half of oil and gas firms foresee shift to renewables

Almost half of oil and gas companies have said they foresee being more involved in renewable energy in the UK in the next three to five years, a survey has found.

The 33rd Oil and Gas Survey, by Aberdeen and Grampian Chamber of Commerce, found 49% of contractors said they will definitely become more involved in renewable energy on the UK Continental Shelf (UKCS) by 2026.

A total of 75% of respondents said they would definitely or probably become more involved, while 19% said they would not become more involved or it was unlikely, while 6% said the question was not relevant to them.

By 2025, contractors said just 68% of their output would be from oil and gas, compared with the current average of 86%

Shane Taylor, the policy manager for the chamber, said: “The survey results showcase a sector that is gearing up to deliver the energy transition in practice but one that is doing so from a relatively fragile position, both in terms of confidence and activity, as it looks to rebuild from the enormous challenges faced in 2020 and the market disruption driven by the pandemic.

“Given that the majority of our fieldwork predated the announcement of the long-awaited North Sea Transition Deal in late March, we expect the outlook to strengthen as government and industry look to invest in the sector’s pivotal role in achieving our net-zero ambitions.

“Not only is it clear that firms in the sector are taking steps to cement their commitments, it also seems likely that fast-movers in this area will be able to gain a real competitive advantage as net-zero ambitions become a more tangible part of the procurement process.”

Net confidence of contractors in the UKCS also returned to average levels at around 6%, rising sharply from the same question six months ago which saw a -76% confidence rate.

A total of 39% of businesses said they were more confident than this time last year, while 33% said they were less, according to the survey, which was sponsored by accountancy firm KPMG.

Martin Findlay, a senior partner for the firm in Aberdeen, said: “As we emerge from the pandemic, we’re facing a new set of climate-related challenges, driven by policy makers and an increasingly impatient public.

“With that in mind, it’s incredibly reassuring that our survey found contractor confidence in the UKCS has significantly improved from -76% six months ago to +6% today.”

Mr Findlay added there is a “common misconception” that oil and gas is “the cause of much of the climate crisis we face”, adding: “It’s actually often the driving force behind a potential renewables revolution.”

He continued: “75% of contractors interviewed for the survey told us they’re likely to become more involved in UKCS renewables work over the coming three to five-year period.

“That’s the highest level recorded since the question was introduced in 2015. Contractors also told us oil and gas activity would account for less than three quarters of their business activity by 2025 – down from the current average of 86%.”

Parties during the recent Holyrood election pushed for a just transition away from oil and gas, with the SNP – who claimed a fourth successive term in government – saying they will work with trade unions, businesses and communities, to bring forward sectoral Just Transition plans, charting the transition of sites, industries, regions and communities.