Oslo, 22 January 2019: New research reveals that more than three quarters (77%) of Norway’s senior oil and gas professionals are confident about the industry’s growth in the year ahead, compared with 65% in 2018. Expectations are rising for headcount to increase in 2019
- 77% of Norway’s senior oil and gas professionals are confident about oil and gas industry growth in 2019, a sharp rise on 65% a year ago
- Three quarters (74%) are optimistic about their own companies’ prospects this year
- 39% predict their companies will create more jobs in 2019, compared to 27% a year ago
- A quarter (24%) see their organizations raising capital expenditure in the year ahead
- 87% believe that cost control will increase or remain the same in 2019.
These findings come in the report A test of resilience, DNV GL’s ninth annual outlook for the oil and gas industry. The research provides a snapshot of sector confidence, priorities and concerns for the year ahead. It is based on a global survey of nearly 800 senior oil and gas professionals and in-depth interviews with sector leaders.
After a challenging few years of cuts and freezes, the research finds Norway to be among the most likely of all countries and regions analysed by DNV GL to boost recruitment and reduce job cutting this year. The proportion of respondents in Norway expecting an increase in overall headcount in their own companies in 2019 is now 39%, compared to 27% a year ago. Only 13% predict their organization will reduce headcount in 2019, down from 55% two years ago and 21% last year.
“Within these aggregated figures for the sector as a whole, individual companies’ intentions vary considerably. For example, DNV GL will recruit, mainly graduates and juniors, and strategic recruitment to take new positions during 2019, ”added Arve Johan Kalleklev, Regional Manager, Norway, DNV GL - Oil & Gas. “That said, it is welcome news that the painful job cutting that took place throughout the recent market downturn is abating as Norwegian oil and gas companies have acted decisively to boost cost efficiency and restore margins.”
The findings on headcount coincide with skills shortages and an ageing workforce rising from eighth place in the survey respondents’ 2018 ranking of barriers to growth in the Norwegian oil and gas market to occupy fourth place now. The latest list is led by the global economy, the oil price and competitive pressure.
This hints at cost challenges ahead, suggested Kalleklev: “As our report stresses, skills shortages have been associated in previous cyclical upswings with rising cost inflation, something that the sector will be keen to avoid as it continues to focus on achieving cost efficiencies.”
While more than a third (36%) of Norway’s oil and gas professionals consider their company to have been highly successful in controlling costs last year, compared to 21% globally, the issue remains on the agenda for 2019. Eighty per cent in Norway expect their companies to assign high (62%) or top priority (18%) to cost efficiency in 2019. However, this measure shows signs of relaxing and early signs of cost inflation may be emerging in the industry. The proportion of respondents in Norway assigning top priority to cost efficiency has fallen for three successive years, from a peak of 49% in 2016 and 28% last year. More than a third (37%) said they experienced price inflation from their suppliers in 2018, and 43% expect suppliers to drive notable price inflation this year.
DNV GL’s research shows Norway’s oil and gas industry to be the fourth least likely to increase capital expenditure (capex) out of all countries and regions analysed in the research this year, and second least likely to boost operational spending (opex). About a quarter (24%) of senior oil and gas professionals in Norway see their organizations raising capex in the year ahead, compared with 30% globally. Only 17% in Norway predict greater opex this year, compared with 22% globally.
The expectations of senior oil and gas industry professionals in Norway for trends in spending on innovation this year are similar to the global picture, however. Eighty-one per cent of Norway-based respondents said they will increase or maintain spending on R&D and innovation in 2019.
All things considered, senior oil and gas professionals in Norway are more confident than a year ago about achieving key financial targets in the next twelve months. Seventy percent believe that their organization will meet its revenue targets, up from 65% last year. Two thirds believe that their company will deliver on profit targets, compared with 59% in 2018.