UK Government ‘failed to win guarantees of oil decommission work’

Gary Smith, the Scottish secretary of the GMB union, told BBC Radio Scotland’s Good Morning Scotland programme yesterday that the country had missed out on the benefits of jobs from oil rig decommissioning and now faced footing the bill for cleaning up after the industry.

He said: ‘‘What the UK Government has done is doled out massive tax cuts to the oil and gas sector in the North Sea and received no guarantees about clean-up in return and secured no contracts in terms of decommissioning work.

“We, as the UK tax payer, are going to pay to clean up the North Sea, we’re picking up 60 per cent of this cost and we’re entitled to know that we’re going to get some of the jobs and investment back.”

He added: “What we have in Scotland is the danger that we’re going to have the worst of all worlds, with none of the benefits in terms of jobs and investment, but taxpayers are going to foot the bill and be paying for this long after the oil majors have deserted the North Sea.’’

Smith was speaking after Scottish firms failed to secure a contract for decommissioning the offshore plant, which will now be towed to a Norwegian port for dismantling.

”Decommissioning work in the North Sea worth up to £150 billion could be lost to Scotland,he warned.

Smith said: “At a UK level and at a Scottish Government level, there has been a failure of leadership, there has been no vision.

“There has been a dishonesty about the inevitable decline in the oil and gas industry, and we haven’t prepared and invested in order for us to capitalise on this opportunity.”

He stressed: “It’s not just about this contract, it’s about the whole decommissioning agenda.”

He said: “In terms of decommissioning, it’s not just about cutting up old rigs, there’s a huge opportunity in terms of recycling and reselling some of the kit from those rigs.

“But the truth is we are not fit for purpose in Scotland, there’s hasn’t been investment in the yards like Rosyth, Bifab [Burntisland], Dundee and Aberdeen.”

As a result of this, he said, the country is “not in a position to capitalise on the opportunities it presents”.

Smith said that in contrast, Norway had “properly invested and prepared for a post oil and gas economy, and they are ready for decommissioning and to seize upon the opportunities”.

Also on the programme, Professor Paul de Leeuw, head of the Oil and Gas Institute at Robert Gordon University, in Aberdeen, said it was ‘‘most unfortunate’’ that the Janice contract has gone to Norway. He said there is ‘‘a very substantial prize for Scotland and the UK in the area of decommissioning.”

He added: “More than £47bn will be spent on this until 2050, but it is not all onshore… there are 5,000 wells to be plugged and 6,000 miles of pipeline to be dismantled and much of that work is already being done in the North Sea by the people who are working for the oil and gas companies there.

A Scottish Government spokesperson said Scotland was ideally placed to develop infrastructure and supply chain capability for decommissioning.

“The Scottish Government and Highlands and Islands Enterprise have provided £1.2 million of public support to develop the Dales Voe Quay and additional £628,000 funding for the Deep Water Shetland projects, both of which will enable Scotland to compete in winning contracts for lucrative decommissioning work,” they said.

“The UK Government still holds the key fiscal levers, and we will continue to press them for fiscal reforms to improve access to decommissioning tax relief and encourage late life asset transfers. This will reduce costs and help our priority of preventing premature cessation of production.

“We are not complacent though… Scottish Enterprise will publish a Decommissioning Action Plan later this year, which will help the Scottish supply chain companies maximise domestic and international opportunities in this market, and will complement the OGA [Oil & Gas Authority] Decommissioning Strategy.”

An OGA spokesperson said: “The OGA will shortly publish its Supply Chain Skills and Exports Strategy which will detail OGA’s approach to engaging with industry, government and others to create an operating environment and supply chain that supports the Maximising Economic Recovery (MER) UK Strategy. This supports anchoring the service sector in the UK and placing it in a better position to capture both a greater share of the domestic and export markets.”

Deirdre Michie, chief executive of industry body Oil & Gas UK, said: “This contract award highlights, however, the continuing need for the industry to support UK supply chain in developing an efficient and competitive decommissioning delivery capability that can compete for and win this kind of business.”

Shadow Scottish secretary to meet oil unions over pay row

LABOUR’S new shadow Scottish secretary will meet oil and gas union representatives in Aberdeen later as their long-running dispute over pay and conditions continues.

Blaydon MP Dave Anderson – who was appointed to the shadow cabinet last month – will speak with Unite shop stewards who represent members working for offshore contractors, including Wood Group.

The union members started a campaign of industrial action two weeks ago, and are due to stage another series of strikes starting next week if the deadlock with Wood Group cannot be broken.

Anderson will also meet union officials from the Offshore Co-ordinating Group (OCG) and with Labour members of Aberdeen City Council who support the OCG’s call for a national UK summit to address the challenges facing the oil and gas industry. He said: “Labour is focused on working with unions and employers to ensure that we can maximise the economic opportunities from the North Sea. I am coming to Aberdeen to listen and to help. However, one thing is certain – if the industry is to thrive, we need companies to co-operate with their workers and treat them fairly. I am very pleased to be able to meet trade unionists standing up for their rights. In the North Sea and right across the country, we need an economy that works for the many and not just the few.”

Unite’s Scottish secretary Pat Rafferty added: “Taking strike action is always a last resort for trade union members and the support and solidarity that workers receive from the labour movement is extremely important.”