The North Sea oil and gas industry is eyeing growth despite concerns over the impact of Brexit, new research has found.

Nearly 60% of businesses expect to expand this year, while optimism has surged to 39% from 2% in 2016, according to the Bank of Scotland oil and gas report.

Companies in the energy sector have seen their financial performance suffer and have been forced to slash their work forces after the oil price failed to recover from a collapse three years ago.

However, the report said the rate of job losses was starting to ease, with the number of companies looking to trim staff over the next 12 months dropping to a fifth from a third in 2016.

More than half of companies are also looking to create more jobs in the year ahead, it added.

Stuart White, Bank of Scotland regional director for mid markets north of Scotland, said the jump in optimism proved the industry was one of the most resilient in the UK.

He stated: “The expression of confidence in this year’s survey reflects an industry that appears to be turning a corner, with conditions for growth more favourable than they have been in recent times.”

Despite the brighter outlook, firms flagged a number of factors that could threaten growth.

Nearly half of companies said rising production costs posed the greatest challenge to the industry, while 35% warned over the fallout of Brexit negotiations and 44% expressed concern about sterling’s slump.

“There are still choppy waters to navigate, with political uncertainty at home and abroad, but we remain confident in the sector,” Mr White added.

In the North Sea 15% of firms said they would bolster their operations in the area over the course of the next one to two years.

Source: stv.tv