UK taxpayers could be left with £75bn N. Sea decommissioning bill, while half of Unite workers say the industry has no future without Govt. help

decommissioning-oil-rigsBritish taxpayers could be liable for costs of £75 billion to decommission N. Sea oil and gas platforms, according to a new report.

The GMB trade union said its research suggested an increased financial burden will be placed on the Treasury via tax refunds to oil and gas companies.

It also called for urgent action to get Scottish ports and fabrication yards “decommissioning ready”.

Gary Smith, GMB’s Scotland secretary, said that the costs of decommissioning were “far more than was originally projected”.

He said the total bill could be “north” of £100bn and taxpayers may have to fund between 50 and 75% of that. He added:

“If we don’t act fast then it could mean the worst of all worlds: A chance to boost economic and employment prospects gone – and the taxpayer paying for the clean-up of the North Sea while other countries profit from decommissioning at our expense.

“The taxpayer is sick and tired of dishing out billions of their hard earned money in subsidies to corporations with little to no return, so doing nothing at both the UK and Scottish Government levels by ‘leaving it to the market’ is simply not an option.

“That’s what’s happened with the Janice platform, the Maersk platform which is going to Norway, and of course we recently had the Transocean rig – which washed up on Lewis – while on its way to being decommissioned in Turkey.

“So Scotland is losing out on this vital work because of a lack of investment and because of a failure and dishonesty and dithering on the part of the UK and Scottish governments.

“GMB Scotland is very clear that the economic, political and moral arguments for government intervention are compelling and with the Autumn Statement and Scottish Draft Budget on the immediate horizon, the time for politicians to act is now.”

Meanwhile, in another survey carried out for the Unite trade union, more than half its 800 offshore workers said the N. Sea oil and gas industry’s future is in doubt without government help, while almost a quarter believe the sector has no future.

A total of 55% of those surveyed said the industry would only survive with government intervention and 24% said they could see “no future for the offshore industry in the UK”.

Just 6.9% believe the industry has a healthy future.

The Scottish and UK governments are not doing enough to support the offshore sector, 95.3% of workers surveyed said.

Almost nine in 10 (89.6%)  backed Unite’s call for the governments to buy stakes in offshore infrastructure such as pipelines or platforms.

unite-logoPat Rafferty, Unite’s Scottish secretary said: “The message from our members and other offshore workers in this survey is clear:

“Unless government starts to come up with some new thinking for the oil and gas industry, the future is looking very bleak.

“We are in the middle of a crisis, and unless there is action soon we could be approaching a point of no return. That would be devastating for the Scottish economy, particularly in the north east.

“Offshore workers are the people worst affected by this crisis – with attacks on their working conditions and as many as 120,000 jobs in the industry and wider economy forecast to be lost by the end of this year.

“We have made repeated calls for a summit to bring together energy companies, trade unions, the Scottish Government and the UK Government, so that we can start planning for the future.

“We have repeatedly called on the Scottish Government and the UK Government to consider using their borrowing powers to take out public stakes in new offshore infrastructure, and to help protect existing infrastructure that might otherwise be decommissioned.

“It’s never happened, and we just can’t understand why.”

Meanwhile, Kevin Stewart, an SNP MSP  for Aberdeen,  said that Chancellor Philip Hammond must provide “a serious package of support” for North Sea industry in the Autumn Statement – as the first oil is produced from a newly developed field.
 
EnQuest today announced that it has started producing oil from the Scolty-Crathes development in the North Sea.

Stewart said: “I’m delighted that we’ve seen the first oil from this field, showing that North Sea has a bright future ahead with great potential to create jobs in the North East – but the industry expects a serious package of support from the Chancellor this week to make this possible.
 
“Exploration and development are integral to the growth of the sector and further incentives would boost investor confidence and encourage them to bring their business to the North Sea.”

Scottish Energy Minister Paul Wheelhouse also urged the UK Government to increase investment following last week’s Oil and Gas UK report which called on government to work with industry to attract fresh investment and avoid premature decommissioning.

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