ABERDEEN may be known as the oil capital of Europe, but with the city still trying to recover from the collapse of the oil price between 2014 and 2016, business leaders are hoping that tourism will put the city on the map for a different reason.

Billions of pounds are being spent upgrading everything from the city’s art gallery and music hall to its airport and centrepiece Victorian pleasure gardens, while a deep-water harbour is being constructed to the south of the city with the aim of attracting the lucrative cruise liner market.

Refocusing on tourism is a relatively easy transition for a city like Aberdeen to make, given that much of the infrastructure the sector will be built on was already in place to service the oil industry.

Read more: Billions of pounds of projects to drive Aberdeen’s transformation

As Dustin MacDonald, chair of Aberdeen City Centre Community Council, said: “Oil companies are not sending people to stay in every hotel, every night as they used to do so it’s about how we use those spaces that have become vacant.

“We’ve got all the things that tourist destinations have like art galleries, beaches and parks, and we should be selling them in a way that makes them shine as a beacon. We haven’t ever really needed to do that because of the oil.”

While tourism is seen as a key way to rebalance the oil-dependent local economy, Aberdeen & Grampian Chamber of Commerce chief executive Russell Borthwick said the wider aim of city planners is to make the North East attractive to tourists and businesses alike.

“Talking to people in other parts of the UK there is a sense that the North East is somewhat infamous for being a cold and inaccessible outpost - difficult to do business with and possessing a glass-half-empty outlook,” he said.

“Other cities have redefined themselves and done it very successfully. We need to learn from this, get better at letting people beyond the oil sector know we are open for business and celebrating all the things that already make the North East a great place to live, work, study, visit, invest and do business in.”

Organisations like Opportunity North East (ONE), a private sector economic development company that is chaired by oil industry veteran Sir Ian Wood, are playing a role in diversifying the local economy by ploughing cash into initiatives that highlight other key sectors in the region.

The Wood Foundation pledged £29m to the organisation when it launched in 2015, with projects the money has so far been spent on including a growth programme for small and medium sized food and drinks businesses and a business accelerator for life sciences companies.

Earlier this year the foundation pledged a further £33m for the five years beginning in 2021 on condition that the sum is matched by what Sir Ian termed “the oil generation” who, he said, “must all work to pass on an acceptable industrial legacy” to future generations.

ONE chief executive Jennifer Craw said that “diversification is fundamental to the future of our economy”, with digital; food, drink and agriculture; life sciences; and tourism expected to sit alongside oil and gas as the region’s key sectors.

Read more: Jennifer Craw - Oil is important but diversification is key

“The region has the advantage of several sector strengths to build upon,” Ms Craw said, noting that the North East accounts for 25 per cent of Scotland’s agricultural output as well as a fifth of the country’s food and drink output.

There are signs that the drive towards greater diversification is already having an impact, with a UK Powerhouse study released in April by law firm Irwin Mitchell and the Centre for Economics and Business Research (CEBR) finding that gross value added (GVA) growth in Aberdeen was higher than that of any other Scottish city in the final quarter of 2017.

In Glasgow and Edinburgh GVA - which measures the value of goods and services produced in a specific area - grew by 1.2% and 0.9% respectively over the period, while Aberdeen recorded equivalent growth of 1.5%.

CEBR economist Josie Dent noted that the figure was driven by a number of different sectors, with manufacturing and business services “performing particularly well”.

“The city is turning its sights away from oil and has experienced growth in a variety of sectors over the course of 2017,” she said.

At the same time, with the oil price appearing to stabilise at around the $70 a barrel mark in 2018, confidence is beginning to return to the oil industry, which will remain key to Aberdeen’s prosperity.

Deirdre Michie, chief executive of trade association Oil & Gas UK, noted that up to 16 projects with a combined investment value of £5bn are in the pipeline for the North Sea basin that will “bring some relief for the supply chain” if they go ahead.

Some of these projects have already been signed off, with Royal Dutch Shell earlier this year confirming that it will redevelop the Penguins field in the waters off Shetland - its first significant North Sea development in more than six years - in a joint venture with ExxonMobil while BP is partnering with Shell and Ithaca respectively to develop the Alligin and Vorlich fields.

This is beginning to feed through to the local jobs market, which suffered from the loss of thousands of roles as a result of the fall in the oil price.

Jo McGregor, who runs oil industry-focused recruitment firm McGregor Consultants, said that the start to 2018 “has been fantastic, which means that companies are investing again in drilling”.

However, Amanda McCulloch of recruiter Thorpe Molloy, which focuses on business support roles, said that while the picture is more positive now than it has been in several years, “there’s no way you can say there’s not some degree of pain happening”.

Indeed, mass job losses are still being announced in the area, with French energy giant Total, which initially said it would shed 250 jobs in Aberdeen as a result of its takeover of Maersk, recently confirming that the number would actually exceed 300.

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Unsurprisingly, consumer confidence in the area remains weak as a result, with CEDR predicting that GVA growth in Aberdeen will slow this year.

For Aberdein Considine managing partner Jacqueline Law this is because local people still make decisions about moving house or changing job with reference to the oil price, even though the region is working hard to wean itself off its reliance on the commodity.

“The difficulty we’ve got is that this is all about confidence,” she said. “This has been the deepest and longest oil and gas recession in the North East and people won’t bounce back from that quickly.

“They will need to see the oil price at $70-plus for a long period without wide fluctuations. Consumer confidence will lag behind that for at least six months.”