However rising wages and input costs and skills shortages may lead to drop in future investment
The oil and gas sector in Scotland is growing more optimistic about the future despite rising costs and skills shortages pushing up wages, a new survey suggests.
Aberdeen & Grampian Chamber of Commerce (AGCC) Oil and Gas Survey found while oil and gas continues to outperform the rest of the Scottish economy, rising wage and supply side costs coupled with lower margins from smaller fields could potentially lead to a drop in future investment.
Skills shortages in the sector have pushed wage rises up between five and 12 per cent in the sector in the past year compared to the national average rise of 1.5 per cent.
The AGCC said all of the operators and 94 per cent of contractors who answered its survey reported pay increases above the national average and 40 per cent said they had changed terms and conditions, mainly linked to enhancing payments to retain staff.
Wages in the oil and gas sector are already more than twice the national average, now averaging £64,000 compared to a national average wage of around £25,000.
The AGCC survey suggests oil and gas companies have been forced to raise wages to prevent staff being poached by rivals.
The survey also suggests most of the recruitment reported from the sector is down to staff being poached from oil and gas rivals rather than bringing people with transferable skill sets from another industry sector.
Kenny Paton, an oil and gas partner with law firm Bond Pearce which sponsors the survey, said soaring wage rates could "kill the goose that lays the golden egg”.
He said: “The survey highlights higher employment and wage levels in the industry but one man's higher wages are another man's higher costs and this must raise serious concerns around the sustainability of such business models.
“In a global arena the North Sea is already one of the most expensive places to do business and when you also add in the difficulty of retaining and recruiting staff you can see that higher costs and skills shortages continue to be a problem in attracting continued and new investment.
“The skills shortage is a major problem with potentially extremely serious implications for the longevity of the North Sea industry.
“It is not just affecting oil and gas operators and contractors but also accountants, lawyers - anyone whose business is closely linked to the fortunes of the energy industry.
“The chamber is proposing an industry wide skills initiative and we would wholeheartedly endorse that because the UK is competing globally for investment and it is important that issues like skills and high costs are not allowed to maim, if not kill, the goose which is laying the golden egg.”