Oil and Gas Industry

Jim Shannon Excerpts

Tuesday 9th October 2018 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I thank and congratulate the hon. Member for Falkirk (John Mc Nally) for securing this debate. As often happens during debates in Westminster Hall, although the issue might not directly concern Northern Ireland—our seas do not contain any oil or gas fields, at least at the moment—a number of my constituents work on oil rigs and travel over and return each week or fortnight, depending on their shifts. The debate is important for those constituents, but also because, although the gas and oil is found in the seas off Scotland, the United Kingdom of Great Britain and Northern Ireland benefits from it. The debate therefore affects every person, every family and every household in the entire United Kingdom of Great Britain and Northern Ireland, which is why it is so important.

We all know the importance of the gas and oil industry and how big it is, and the stats are clear: according to 2018 figures, 37,000 people are employed directly by the industry, and 127,000 are in the relevant supply chains. Most of those roles are in the offshore industry, which is also important to Northern Ireland. Some of the repairs done to the oil rigs and the apparatus that brings the oil and gas ashore take place at Harland and Wolff in Belfast, and it is important to note our input into the process. Statistics from 2017 indicated that 40,000 people were employed directly in the industry, and it is important to record the importance of the oil and gas sector to Northern Ireland. Oil and gas provided 72% of the UK’s total primary energy, and net imports of natural gas were around 45% of UK supply. The majority of oil—almost 80% of final consumption—is refined for use in transport. Those figures indicate how important the industry is to everyone in the United Kingdom of Great Britain and Northern Ireland.

The debate is also pertinent as we look towards the Budget. In 2016, the Chancellor of the Exchequer announced commendable reductions in taxation for North sea oil and gas fields to maximise the economic recovery of the North sea. The Budget also included commitments effectively to abolish petroleum revenue tax by permanently reducing the rate from 35% to 0%, to simplify the regime for investors and level the playing field between investment opportunities in older fields and infrastructure and new developments, and to reduce the supplementary charge from 20% to 10% to send a strong signal that the UK is open for business—we need the message to go out from this debate that we are open for business and working positively towards that. In recognition of the exceptionally challenging conditions that currently face the sector, those changes were introduced in the Finance Act 2016.

As has been said, although oil prices fluctuate between massive highs and lows, they are currently high. We want all regions to benefit from the oil and gas sector, so perhaps when he responds to the debate the Minister will indicate how we in Northern Ireland can continue to benefit from the oil and gas that we in the whole United Kingdom of Great Britain and Northern Ireland own, as individuals and as regions.

In the 2017 autumn Budget, the Government focused on decommissioning costs and announced that they would bring forward legislation to introduce a mechanism for transferable tax history. Tax relief on decommissioning costs is linked to tax payment history, so the new mechanism would allow tax history to be transferred along with the asset. The Government also announced that they would consult on reducing tax for decommission- ing costs incurred by the previous licence holder.

It is clear, however, that we must do more to address prices for consumers. The Minister may not be directly responsible, but my biggest plea to him is that, because energy prices fluctuate, people consuming oil and gas think they are saving money when they come to pay for it, but actually they are not. Back home in Northern Ireland, a number of constituents who changed between oil and gas six months ago have found themselves in a difficult place in the past few weeks. That is yet another squeeze on so many families who cannot afford it, and we must address that issue at the highest level.

I look to the Minister for advice on how we can and will secure the future of this industry, and on our ability to provide our own sustainable energy source for heating in this great nation of the United Kingdom of Great Britain and Northern Ireland.