Wood Group subsidiary Wood Group PSN has put its money where its mouth is and announced plans to address cost escalation in the North Sea by reducing rates paid to its UK-based onshore contract workers.
The firm said the move was in response to cost and resourcing challenges affecting the UK North Sea oil & gas sector. Wood Group's CEO Bob Keiller (pictured) raised the issue during Offshore Europe last year, saying the industry needed to 're-baseline salaries' its costs.
Recent reports on the North Sea have raised serious concerns about operating costs in the North Sea. According to statistics from industry body Oil & Gas UK, the UK oil and gas sector's operating costs rose 15.5% last year to a record US$14.8 billion, with the number of fields with opex costs of more than $50/boe doubling during 2013.
Read more: Production falls, costs rise and North Sea slump warning
Dave Stewart, WGPSN's UK managing director said today: "A rate review showed us that over the last five years contractors' rates have risen three times more than staff rates. We need to control costs for our clients and focus on increasing our staff ratio.
"Escalating contractors' rates are driving industry costs up, which inhibits investment, growth and long term sustainability. We don't believe this is sustainable, and we need to control costs to help maximize economic recovery and to safeguard the future of the North Sea."
Wood Group said Wood Group PSN (WGPSN) would reduce the rates paid to its UK-based onshore limited company contract workers. Specifically, the brownfield production services business will be introduce a 10% decrease in UK onshore contractors' rates from June 1.
Stewart added: "The Wood Review has been a catalyst for many of these discussions. Companies have an increasing focus on capital efficiency, and we must seek opportunities to work more innovatively to assist our clients with this. The North Sea is a relatively mature sector and we believe this kind of decision isn't optional, it's necessary - we have to better manage costs and focus on developing employees, in order to create job security for future generations."
WGPSN employs about 12,000 people onshore and offshore in the UK. The company has offices in Aberdeen, Glasgow, Runcorn, and Hull.
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