Employment in the oil and gas industry dropped in 2015 after several years of strong growth. It is challenging to estimate precisely the number of people employed in the sector, because it is complicated to separate deliveries of petroleum-related goods and services and deliveries to other industries. Furthermore, it is even more complicated to estimate indirect employment, in other words employment generated in other parts of the economy by demand from the petroleum industry.
Various definitions and methods give different estimates of the total number of people employed in the oil and gas industry. You will find a brief summary in this article.
A report published by Menon Economics (2020), funded by the Ministry of Petroleum and Energy, showed that there were in excess of 200 000 either directly or indirectly employed in the petroleum sector in Norway in 2019. The study includes number of employees who are linked to services and value creation that takes place directly on the Norwegian continental shelf, as well as the effect of exports from the offshore supply industry. In order to calculate the employment effects of operations, investments and exports for the offshore supply industry, Menon Economics has used ITEM, their own model which calculate spillover-effects. The model is based on Statistics Norway's input-output analysis.
A similar study done by Statistics Norway estimated that around 160 000 people were directly or indirectly employed in the petroleum industry and petroleum-related industries in 2019. This figure corresponds to about 6 % of total employment in Norway. The figures are estimated by input-output analysis, and Statistics Norway describes this method in the report Spillover-effects from the offshore petroleum to the mainland economy. The level of employment associated with the petroleum sector has been revised upwards form the previous reports. The data collected by Statistics Norway do not allow for a meaningful distinction between direct and indirect employment in the petroleum sector.
|Employment related to the petroleum industry||2016||2017||2018||2019|
|Statisitcs Norway's report from 2018||173 200||170 200|
|Statistics Norway's report from 2019||139 500||139 900|
|Statistics Norway's report from 2020||148 000||158 400|
|Percentage of total empleyment||5,1 %||5,0 %||5,8 %|
According to Statistics Norway, there are two particular factors that can explain the higher level of employment from the report in 2019 to 2020. Statistics Norway's report from 2020 is based on the input-output analysis for 2018, and the report from 2019 is based on the input-output analysis for 2017. Changes in the so-called input-output analysis occur over time, which means that the relationship between deliveries of goods and services between the various sectors of the economy change from year to year. Access to better data for employment in the petroleum industry and other industries has also contributed to the adjustment.
Indirect employment is a result of demand from the petroleum industry for goods and services in a variety of sectors, including wholesale and retail, IT equipment and services, employment agencies, renting of machinery and equipment, hotel and restaurant and legal and accounting services. Statistics Norway's report only covers activity related to the Norwegian petroleum industry and does not include activity related to deliveries to petroleum activity in other countries. In addition, there are employees in export companies targeting the industry, and according to the report from Menon Economics, these make up an estimated 50 000 people.
On behalf of the industry organization Norwegian Oil and Gas, Menon Economics published a report on spin-off effects on employment in the petroleum sector (2021). The report shows that the petroleum industry's activity contributed 180 000 man-hours in 2019, which corresponds to around 205 000 employees. The method used is reminiscent of the one used by Statistics Norway. It is estimated that 24 000 are employed in companies operating on the Norwegian continental shelf. The employment effects as a result of the offshore supplier industry's deliveries to the petroleum industry in Norway and internationally are estimated at 92 000 , while 89 000 are so-called spillover-effects. These spillover-effects occur when operating companies buy goods and services form companies not specialized in the petroleum industry.
The illustration below, based on data from National Budget and SSB, illustrates the direct employment in the oil and gas industry since the early 1970's. Employment in companies not fully targeted towards the upstream sector are not included in these figures. This includes the major parts of the oil service and supply industry. From 1972 to 2014 the employment increased from 200 to 67 000. The illustration also captures the first ever drop in employment from 2014 to 2018.
Number of employees in the Norwegian petroleum sector, 1970-2020
Source: Statistics Norway - Annual national accounts (table 09174)
Regional employment and local value creation have been long-standing objectives for Norwegian oil and gas policies. This has contributed to making Norway a global front-runner in a number of areas. Regional employment is especially high on in western parts of Norway, particularly in Rogaland and the Stavanger-region. As the shelf has matured and offshore activities have moved north, so has the activities onshore. Currently, world leading oil and gas clusters and a global competitive oil service industry exists in many parts of the country. According to IRIS, there were employees in petroleum-related industries in 415 of Norway’s 428 municipalities at the end of 2014.
Lower activity and weaker demand from the petroleum industry, both in Norway and globally, had major impacts on the oil service and supply industry. Reducing staff costs and number of employees have been necessary to cut costs and adapt to the lower activity level. The greatest impact has been in western and southern Norway, where a higher proportion of total employment is linked to oil and gas activities.
Located throughout Norway, the industry employs a large share of people along the coastline. The petroleum sectors main seat is in the Stavanger region, where companies offering a wide range of goods and services are located. In other parts of the country, companies operating in the same market segment are clustered together based on regional expertise.
In and around Oslo is well-established engineering expertise and a cluster of seismic companies. Trondheim has a strong position in education, research and development, while the Bergen region has become a hub for platform maintenance and subsea equipment. In Buskerud, especially in Kongsberg, is a strong cluster focusing on subsea technology, automation and dynamic positioning equipment. Southern Norway is home to world-leading companies specializing in drilling technology. The Aalesund region has maritime companies who together make up a complete shipbuilding and outfitting cluster.
Bodø Science Park publish an annual report on the petroleum activity in the most northern counties; Nordland, Troms and Finnmark. The report concluded that 178 northern Norwegian companies had deliveries to the petroleum industry in 2019. Combined, these deliveries contributed to 1749 man-hours, which was around 100 more than in 2018.