The Scottish and UK governments have today announced a combined £500 million boost for the country’s North Sea Oil industry and Aberdeen city and shire.
The Westminster and Holyrood governments are each paying £125 million for the Aberdeen City Deal, while the Scottish Government has also announced a further £250 million funding package towards the delivery of improved transport and digital connectivity and local housing programmes requested by the local authorities.
The oil and gas industry is the UK’s largest industrial sector, contributing around £19 billion in gross value added in 2014. As of 2014, the industry was estimated to support around 375,000 jobs across the economy.
Oil and gas are expected to continue to provide around 70% of the UK’s total primary energy from now until 2035.
There are still the equivalent of between 11 and 21 billion barrels of oil to be exploited from the North Sea – half again of all those exploited to date. Meanwhile, between now and 2040, around £45 billion is forecast to be spent on decommissioning of its offshore infrastructure.
The chief executive of Oil & Gas UK, Deirdre Michie,said: “We very much welcome Prime Minister David Cameron’s visit to Aberdeen and his recognition of the seriousness of our situation.
“His announcement of a £250 million fund for the Aberdeen Region City Deal – coupled with the matched funding from the Scottish Government – is a much needed positive step forward for north east Scotland and will benefit our sector more widely.
“While the oil and gas sector is under severe pressure globally, due to the current oil glut and price collapse, it is being felt particularly forcefully in the North Sea, which is a mature basin with its own particular difficulties and cost challenges.
“Companies are doing all they can to bring down costs and be more efficient, but many are still having to make difficult decisions.
“Support from both the UK and Scottish Governments, the Oil and Gas Authority and local authorities is vital so it is extremely timely that the Deal will see co-operation between these parties.
“The industry needs to restore its competitiveness and attractiveness as a place to do business. Without that, it won’t be able to maximise recovery of resources – the billions of barrels of oil and gas that still remain in the North Sea.
“Aberdeen and the north-east have to compete with international energy hubs such as Houston and Dubai. Investing in infrastructure and innovation here, particularly through the new energy innovation centre, is a hugely positive move which will further cement Aberdeen’s position as Europe’s oil capital, at the heart of the UK ‘offer’ to the global oil and gas supply chain.”
Michie also welcomed the new ministerial group on oil and gas, to be chaired by British Energy Minister Amber Rudd: “Senior level, co-ordinated engagement from Government to support the industry and those who work in it is very encouraging. The group’s focus on exports, skills and investment is highly relevant in today’s climate and Oil & Gas UK stands ready to engage with it on its workforce plan in the Spring.”
“These developments are good news for our industry but our efforts must go on. Industry needs to continue to work with the Oil and Gas Authority to ensure we have a world class regulatory regime, and with Treasury, through their ‘Driving Investment Strategy’, to ensure we have the most appropriate fiscal regime possible.
“Despite our difficulties, this is still very much an industry with future, capable of playing a critical role in meeting the UK’s energy needs, bolstering the UK economy and supporting hundreds of thousands of UK jobs.”