DeepOcean to shed North East jobs as oil industry crisis spreads

The Darlington subsea engineering specialists have seen work decline following falling oil prices

Equipment at DeepOcean
Equipment at DeepOcean

Jobs are highly likely to be lost at Darlington-based subsea engineering specialists DeepOcean, amid further turmoil in the oil and gas sector.

Following notice of a “reorganisation” across its global operations, the Dutch firm’s chief executive Bart Heijermans told The Journal it was highly likely jobs would be shed from the firm’s 140-strong Conniscliffe Road base.

While the number of Darlington jobs in question is yet to be confirmed, Mr Heijermans was clear the reorganisation came in light of the recent international oil price crash which has caused a number of firms to prune their North Sea operations.

He also said the impact of the oil market downturn had been compounded by the much lower than expected availability of renewable energy project work, and expressed his frustration at the way many such contracts had been awarded to firms with little or no UK presence.

Mr Heijermans said: “The reorganisation will result in headcount reduction across the whole of our operation. It is the result of both the fall in oil price over the last few months and a lower than expected level of renewables work.

“A lot of work on wind projects has been awarded to European firms, in the likes of the Netherlands and Belgium, with little or no presence in the UK, and that’s disappointing for us.

“We’ve invested a lot of money in our operations, in Darlington and elsewhere, because business was booming – but recent developments in the international oil price have significantly weakened the market and there is less work.

“We have to make sound judgements and make sure we get it right as we want to have a strong business in Darlington in the long term. We’re hopeful this downturn will pass and the market will pick up again – at which point we recruit again.

“I believe this will happen but we have to take precautions in the short term.”

James Ramsbotham, chief executive of the North East Chamber of Commerce, said the DeepOcean news and other events like it were “genuine cause for concern”.

James Ramsbotham
James Ramsbotham
 

He said: “It is an industry that, while cyclical, is facing real challenges in the short term as oil prices continue to fall. However, there seems little doubt that in the medium to long term, oil and gas will pick up and continue to be one of the foundation stones of the regional economy.

“It is also important to remember that a great many of our major operators in this sector are working in other engineering sectors across the globe, with many of these firms predicting expansion, rather than retraction. Hopefully, some of the workers impacted by today’s unfortunate news will find alternative employment elsewhere in the region and we will retain the skills that have helped our region establish a worldwide reputation in oil and gas engineering.”

The reorganisation has split DeepOcean into two main areas of operation: the “Greater North Sea” (GNS) and “International”.

Under its newly created GNS function, DeepOcean intends to merge activities in Norway, the Netherlands and the UK – with the aim to expand its share of the inspection, maintenance and repair (IMR) and surveying markets.

The firm also said it would focus on securing more renewables and decommissioning work.

Dame Anne Begg MP, chair of the British Offshore Oil and Gas Industry All Party Parliamentary Group, said: “While many welcome the fall in oil price, the consequences can be devastating for those in the oil and gas industry who lose their jobs. It has been estimated that up to 35,000 jobs could be lost across the UK if the oil price doesn’t pick up soon.

“It is because of the volatility of the oil price, that the new leader of the Scottish Labour Party, Jim Murphy, has called for the setting up of a stability fund so that when there are downturns in the industry the government is able to step in with help to support the local communities affected.”

News of DeepOcean’s reorganisation follows the closure of oil field services firm Archer’s Blyth base and confirmation that subsea firm Flexlife was reviewing its Gateshead operations.

At the time of publication the price of Brent crude – the North Sea benchmark – had dropped by 5.6% to $47.27 per barrel, its lowest level since Spring 2009.

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