Future of Oil and Gas in the North Sea and the Potential Challenges for HR professionals Employment Eye Event, Aberdeen, May 2018 Stuart Payne – Oil & Gas Authority Alix Thom – Oil & Gas UK

Global Context Population continues to grow: Projected to grow from 7 billions (today) to 10 billion by 2055 (2.5 billion in 1955) Today 1.1 billion people have no access to electricity Today 3 billion people use firewood or similar for heat & cooking Paris climate change agreement to limit temperature rises to less than 2 degrees C above pre-industrial levels Key role for hydrocarbons remains Renewables fastest growing source Industry (50%) biggest consumer of fuel and feedstocks Heating (29%) second biggest Transport accounts for the rest (21%) Sources: BP Energy Outlook 2018, United Nations Population Division, Shell Energy Transition Report 2018

Global Context Source: BP Energy Outlook 2018

Context – the UKCS Oil price Government response Government response 2014 2015 2016 2014 - Crisis 2015 – Emergency Response SCT & PRT Reduced £20m for Seismic £180m for OGTC 2017 £5m OGA Data & Studies Decom Tax Transfer 2016 - Fightback 2017 - Stability Wood Review £1.3bn Fiscal Package £20m for Seismic Scotland’s Expert Commission HMT Driving Investment Industry outcomes 2017 23 2016 22 1.65 73 16 2015 26 1.6 71 Unit operating costs ($) 21 Production (MMboepd) E&A wells Production efficiency (%) 2014 31 1.4 65 30 Sources: OGA 2018

Vision 2035 & Future Projections Realise full hydrocarbon potential of the UKCS World class competitiveness Expand service sector range, market coverage, double exports Increase the prize by half again over the next 20 years

Potential challenges for HR professionals? Long term attraction – the brand & image of the sector (our role in the journey to a low carbon economy) Skills – now and in the future: Risk of inflation – knee-jerk reactions are not our friend Leadership through enormous change Digital “All Energy” AI & Robotics Remote Operations Advanced Software

Meanwhile, back at the ranch… Compelling story – global, North Sea and decommissioning Workforce engagement More joined up industrial relations HR led education and cross fertilisation Within companies Through supply chain Across sectors Skills shortages Gender pay gap Employment status – Definition of employment status for employment rights Possible extension of IR35 changes to private sector

Taylor Review This Photo by Unknown Author is licensed under CC BY-NC-ND This Photo by Unknown Author is licensed under CC BY

Review of Modern Working Practices – 6 themes Security, pay and rights Progression and training The balance of rights and responsibilities Representation Opportunities for under represented groups New business models Review looked at 6 themes. Government said that the panel ‘set out a compelling case that now was the time to place quality of work on an equal footing with quantity of work when measuring success. The overarching ambition was that all work…should be fair and decent with realistic scope for development and fulfilment. https://www.gov.uk/government/publications/good-work-the-taylor-review-of-modern-working-practices

Government response – 4 consultations Agency workers recommendations (9th May) Enforcement of employment rights (16th May) Measures to increase transparency in the UK labour market (23rd May) Employment status (1st June) https://www.gov.uk/government/publications/government- response-to-the-taylor-review-of-modern-working-practices

Employment status Issues with the current employment status regimes Legislating for the current employment status tests A better employment status test? Employment status for employment rights Defining working time Defining self-employed and employers Alignment between tax and employment rights? 64 questions!!!

Extension of IR35 to the private sector This Photo by Unknown Author is licensed under CC BY-ND