New efforts to support the UK offshore industry are being stepped up
Published: 30 Jul 2015
Efforts to support the UK oil and gas industry - and save thousands of North East offshore jobs - are being stepped up by the Government, as Peter McCusker reports.
The new Energy Secretary Amber Rudd has agreed to re-establish a parliamentary group aimed at helping secure thousands of jobs in the UK fabrication industry.
The Cross Party Oil and Gas Group (CPOGG) will be chaired by Energy Minister Andrea Leadsom and has been re-created to put pressure on the major oil companies to place orders with UK fabricators.
This follows earlier moves by the Government to cut taxes for oil majors operating in the United Kingdom Continental Shelf (UKCS) and £20m to support new seismic surveys.
However, the depressed oil price and the lack of exploration on the UKCS mean there are growing concerns over the future health of the offshore industry.
Under the Coalition the CPOGG claimed credit for helping Wallsend-based fabricators OGN Group secure a major contract from Enquest, which supported over 1,000 jobs.
It had been established under previous Energy Secretary Ed Davey with the specific aim of putting pressure on the major oil companies to support the UK supply chain, and place orders for new oil rigs and associated facilities with UK companies.
It has been claimed almost 20,000 UK jobs have been sacrificed as a result of these fabrication contracts going to foreign competitors, despite these companies receiving UK tax breaks to progress developments.
Earlier this year Journal Energy reported on concerns by OGN chairman Dennis Clark that the Government needed to do more to ensure these contracts were placed in the UK.
He warned of tough times ahead for the UK fabrication industry if more Government support was not forthcoming and highlighted how it was hoping to secure work on the £3bn Maersk Culzean gas project in the North Sea, but feared the contract would be placed overseas.
Following the Conservative’s triumph in the May election the CPOGG ceased to meet, as previous chairman Conservative MP Charles Hendry had stood down and many serving Scottish Labour MPs lost their seats to the Scottish National Party.
On June 25 during Energy and climate change questions Mary Glindon, MP for North Tyneside - the constituency in which OGN is based - raised the following question with Ms Rudd: “Does the Secretary of State share my concern that Maersk, in receiving a substantial tax allowance from the Treasury for its Culzean project, will place very few jobs in the UK?
“Will she meet me and representatives of the industry from my region to discuss how her Department can ensure fair play for the UK industry before she makes a decision or approves the fuel development plan?”
Ms Rudd responded: “The Hon Lady has, of course, long run the oil and gas parliamentary group. I look forward to working closely with her to ensure that the oil and gas industry gets fair treatment and is supported as much as it can be, given the situation with the oil price. We need to make sure that we give it as much support as possible. I will certainly meet her to discuss it further.”
A meeting between between Ms Rudd, Ms Glindon and Mr Clark took place two weeks ago and two days after Andrea Leadsom had with met senior executives from Maersk.
Ms Glindon said: “It’s important to recreate this forum which allows us to speak plainly to the oil companies and outline what we expect when they place fabrication orders for the UKCS.
“While we can not tell them what to do, our aim is to ensure they are aware of their corporate social responsibility to the UK supply chain as they are in receipt of tax breaks from the UK Government.
“We believe our work was successful in securing contracts for UK firms in the last Parliament and we hope it will do likewise in this.”
She said that Ms Rudd was keen to see apprentices trained in the North East fabrication industry, and would look at what the Government can do to help maintain the region’s skills base.