LIVING standards in Aberdeen have fallen below the UK average for the first time since 2003 – but more North Sea drilling will not mean more jobs for the city, according to a new report from a leading think tank.
The Resolution Foundation, in a study published on Thursday, found that the link between oil and gas output and job creation has been broken in Scotland’s North East.
“Production rose by a fifth between 2014 and 2019, the only sustained interruption to the basin’s decline since 1999, yet employment in Aberdeen’s oil and gas sector fell by a tenth (11 per cent) over the same period,” the report said.
“This is because remaining reserves are predominantly in smaller fields, connected to existing platforms and infrastructure, and extraction is more technologically driven than in the past.”
The think tank’s report said that if the UK Government issued more oil and gas licences in the North Sea, it would raise production this decade by “under 1 per cent” and do “nothing measurable” to Aberdeen’s job market.
Currently, the Labour Government is considering whether to allow the development of the Rosebank and Jackdaw oil and gas fields, which were approved by the Tory administration but then overturned in the courts due to a failure to take into account the fields’ downstream emissions.
As The National reported previously, Adura – a joint venture between Shell and Equinor – stated in an environmental impact assessment that the development of the Jackdaw field would see “27 new Full Time Equivalent (FTE) roles required”.
After noting that figure, the Resolution Foundation report went on: “An extra headwind is rising costs. The average real terms operating cost of producing a barrel of oil equivalent went from £14 in 2020 to £19.50 in 2024, an increase of 39 per cent, giving the UK the highest operating cost per barrel of any major offshore region in the world.”
It further said that oil and gas production is down 76 per cent on its 1999 peak, and is set to fall another 40 per cent by 2030.
On living standards in Aberdeen, the report said that payrolled employment in the city is “down 8 per cent since 2015, falling at three times the Scottish rate over the past year”.
It added: “With more than £9 billion having been lost from incomes, overall living standards have dropped below the UK average for the first time since 2003.”
The report then went on: “The current divisive debate about future North Sea exploration therefore misses the point that falling output is overwhelmingly driven by a basin running dry.
“That said, Rosebank and Jackdaw, the two Scottish oil and gas fields currently at the centre of public attention, are in a position to help ease the transition, but only very marginally.”
Jonathan Marshall, principal economist at the Resolution Foundation and one of the report’s co-authors, said: “As decisions on Rosebank and Jackdaw steal the headlines, politicians on all sides risk missing the bigger picture when it comes to jobs and the impact of net zero. The transition already underway is being poorly coordinated, leaving local economies planning for a net zero jobs boom that risks never arriving.
“This next phase of the transition is set to double employment in low-carbon sectors. For places like Aberdeen and Grimsby, which already have a foothold in these industries, there is a real opportunity to become net zero powerhouses, but the results so far have been underwhelming.
“To make the most of the opportunities for growth and regeneration, and to bring the costs of electricity generation down for all, the Government must be more hands on in directing investment and willing to pick regional winners.”
