The 30th Oil and Gas survey, conducted by Aberdeen & Grampian Chamber of Commerce in partnership with the Fraser of Allander Institute and KPMG UK, reveals that around 45% of contractors have increased investment spend in the UK Continental Shelf (UKCS) in the past 12 months. Almost half (47%) report they have either started to use artificial intelligence or will do so in the next five years.

The survey looked at work in the six months to April 2019, asking firms about their prospects for the year ahead, as well as the next three to five years, in order to assess trends in exploration and production, decommissioning and other related oil and gas extraction activities both in the UK and international markets.

The survey highlights a welcome trend in R&D investment with the highest proportion of firms reporting an increase in spend since 2006/07 and firms indicating that they anticipate further rises over the next few years. Only 6% of firms are currently citing taxation as a limiting factor when it comes to UKCS activity, down from 26% in 2017. Further to this, with 35% reporting that the availability of tax or funding incentives had influenced their decision not to invest in further R&D, the report suggests the supportive environment created by Government is having a positive effect.

Contractors in the UKCS are reporting healthy results. Almost half (49%) of firms are working at or above optimum levels, the highest figure recorded in the survey since 2014. Almost three quarters (72%) of firms are forecasting an increase in profits in 2019 and the results also recorded the highest figure in this survey’s history indicating a rise in the value of UKCS production-related activity.

A figure that bodes well for the future of the sector is that a reported 90% of firms were optimistic about the city of Aberdeen’s long-term future.

Moray Barber, partner at KPMG, said: “It is extremely welcome to see the results pointing to increased investment in staff training, developing new markets and maintenance of infrastructure and it is positive to note that 35% of respondents say that funding and tax incentives influence their decisions to invest in R&D in the UK. The report tells us that there has been investment pick up but we need to be cognizant of the fact that this is starting from a relatively low base from the challenging times the industry was facing four or five years ago.’’

Shane Taylor, research and policy manager at Aberdeen & Grampian Chamber of Commerce, said: “Our survey paints a picture of an optimistic industry, investing to deliver the opportunity of a productive UKCS and a vibrant future for Aberdeen as an all energy hub. The levels of optimism reported in our survey are encouraging but for those of us passionate about the future of the region, it’s excellent to see an overwhelming majority of firms are optimistic about the long-term future of Aberdeen as not just Europe’s oil and gas capital, but as an all-energy hub which will be relevant long after the UKCS comes to the end of its operational phase.’’