North Sea Oil and Gas (Employment)

John Robertson Excerpts

Tuesday 20th January 2015 Westminster Hall

[John Robertson (Glasgow North West) (Lab)]

It is a pleasure to follow the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith). I congratulate my hon. Friend the Member for Aberdeen North (Mr Doran) on securing this debate. It is perhaps a sign of the times that we have decent turnouts in debates only when a disaster or something bad has happened. I congratulate my hon. Friend on the work he is doing in his constituency, along with his fellow Members of Parliament in the area, and I thank the shadow Chancellor, who, along with the new leader of the Scottish Labour party, is in Aberdeen today to help to fight for jobs. I do not want to make a political point about it, but it would be a lot better if the Secretary of State for Scotland and the First Minister and various others were with them, putting up a political united front to help the industry and jobs.

According to Oil & Gas UK, about 450,000 jobs are associated with the oil and gas industry. The hon. Member for Banff and Buchan (Dr Whiteford) asked about jobs and the number of people who have been hit in the north-east, but only 202,000 of the jobs are actually in Scotland; the rest are outside Scotland. With 130,000 jobs in the Aberdeen area and all these other jobs, the whole country is suffering. It is not just one small area.

[Dr Whiteford]

I fully accept that many jobs throughout the UK depend on the oil and gas sector. The difference in the north-east of Scotland is the concentration of jobs. It is not just the direct oil jobs that depend on the oil and gas sector; it is not even just the jobs in the wider supply chain. It is the small shops, our retailers, our service providers, our construction companies—our whole economy is heavily dependent on oil and gas, so the ramifications of this go far further than simply just jobs in the oil and gas sector.

[John Robertson]

The hon. Lady is absolutely right, but a small company in my constituency that makes goods that are used up in Aberdeen also uses local shops and local people. If the jobs of 450,000 people in the United Kingdom are in danger, we can multiply that by goodness knows how many, but it would probably be millions of people who could be affected.

We know from previous times in the North sea that there will be losses. It has happened before and, sad to say, it will probably happen again, but the fact of the matter is that the North sea is in a particularly unusual position now. It is not what it was back in the ’80s, when we were getting oil and gas into the country. We are still getting oil and gas, but we are getting it from other places. We are not self-sufficient any more in these commodities; we now rely on other areas, so we have to fight to keep these jobs.

At a time when America has been diversifying into shale and is now the biggest seller of oil in the world, rather than the middle east, we have to look at where we are going in the future, but as the hon. Member for Banff and Buchan and my hon. Friend the Member for Aberdeen North said, we also have to look at skill shortages and how to increase our knowledge of how to work in these areas. Some of the experts I have talked to tell me that this depression in oil and gas will go on for at least two years. If it lasts that long, that might be fair enough and we could recover, but I have a horrible feeling it may last a lot longer than that. The price of oil is now down to less than $50 a barrel and the middle east countries are talking about continuing to supply oil and gas at the same rate, to ensure that the price remains low. That will have a knock-on effect for the North sea.

As my hon. Friend—we are on the same Select Committee—the Member for West Aberdeenshire and Kincardine said, oil and gas jobs have a knock-on effect for everyone. The rigs and everything else out in the North sea grow old and rust; they have to be maintained, but there will be no point in maintaining them if they do not get used. We have to find something like £40 billion over the next 30 or 40 years to clean up the North sea. That is not so bad if it is still in operation, but if the North sea is not in operation, we have to find that money from somewhere else.

My point is that we are talking about only the North sea at the moment. Some jobs in various companies have been lost already, but if we, the politicians of this nation, do not get our act together and do not work together to preserve jobs, not only will Aberdeen and the areas where the other 200,000-odd people are working suffer, but the whole nation will suffer. All the parties should get together and we should all fight for those jobs.

--- Later in debate ---

[Mr Weir]

I have already referred to that; the hon. Gentleman should listen a bit more carefully. I did mention the First Minister’s announcement about what the Scottish Government were doing.

The Scottish Government have endorsed the findings of Sir Ian Wood’s review on maximising recovery on the UK continental shelf and particularly his recommendation of a stronger, more effective regulatory body, and so, too, did the UK Government. We welcomed the long-awaited announcement of the appointment of the OGA’s chief executive. However, it is imperative that progress is much quicker so that we can start to reap the benefits that an effective, well resourced authority has the potential to bring the industry and the nation.

[John Robertson]

Has the hon. Gentleman taken into consideration the fact that the Saudi Arabians and the Russians have enormous resources in this field, which we are trying to maintain? If they wish to keep undercutting us, the policy he outlines will become useless.

[Mr Weir]

In a way, I am surprised by that comment from the hon. Gentleman, because it seems to be a counsel of despair. We must do what we can to keep our industry going. Unfortunately, we cannot influence what the Saudis or anybody else do with their oil prices. As far as we can, however, we must take the action necessary in the UK to make sure that the North sea industry, and particularly the employment that it provides, survives.

Even if the Saudis do try to do what the hon. Gentleman says, they cannot do it for ever. At some point, oil prices will start to come up again; indeed, the International Energy Agency has predicted—obviously, this is only a prediction—that the price will probably return to about $80 a barrel in the current year. We will have to wait and see whether that happens and, if so, how fast.

The OGA is particularly important, given the pressures being felt by the industry. The Scottish Government were pleased to see Aberdeen confirmed as the location for the OGA’s headquarters in June, and the suggestion that there will be an increase from 59 to 145 full-time equivalent staff by 2019 is welcome, because it might help to address the serious understaffing identified in Sir Ian Wood’s review.

The challenge is to ensure that the appropriate level of expertise and knowledge is secured, but it is critical, given present circumstances, that appropriate resourcing is put in place swiftly at the new OGA, with the correct level of industry experience and expertise. Industry is clearly concerned about delays in the process. As Malcolm Webb, the head of Oil & Gas UK, has pointed out, it looks as if it will take until summer 2016 before all the processes involved in setting up the OGA are completed. I agree that that is far too long, and I would appreciate an explanation from the Minister of why the process is taking so long and what action will be taken to speed it up.

The Wood review must be implemented effectively and with increased speed and resources, in the light of the growing challenges facing the industry. On the website Energy Voice, on 6 January, Malcolm Webb said:

“Years of confused and confusing energy policy, not helped by a revolving door approach to the appointment of ministers (we’ve seen a total of 35 different Energy and Treasury Ministers given responsibility for our industry in the last 14 years), have raised serious questions about our politicians’ awareness and understanding of this industry and its vital importance to the UK economy.”

I agree, and the UK Government need to take urgent action to assist the industry at this difficult time.

--- Later in debate ---

[Thomas Docherty]

My hon. Friend is absolutely right to highlight the diversification of interests in this important sector across the United Kingdom. These are highly skilled engineering jobs, which are highly regarded and greatly sought after. She is also right that such jobs are particularly sought after in areas of relatively high unemployment. I used to work in the nuclear industry, and I was based in what was then part of the constituency of my hon. Friend the Member for Dumfries and Galloway and is now in the Minister’s constituency. Unlike in the south-west of England, where the engineering and scientific industries were in competition with other companies, there was almost a monopoly on the work force in places such as Dumfries and Galloway. To an extent it is the same in the north-east of England and the north-east of Scotland, where there is not the same diversification in jobs. It is important that the two Governments recognise their responsibility to work together.

[John Robertson]

I was in Belfast yesterday, right beside where Harland and Wolff used to be. There are some oil rigs sitting there that are now being fitted out because the contracts are signed, but what will happen to the companies that have invested in that kind of industry if we do not start getting work back in the North sea?

[Thomas Docherty]

I could not agree more with my hon. Friend. That is why I was genuinely asking the hon. Member for Angus (Mr Weir) what practical steps Scottish Enterprise will be taking. Many of us have had a slightly cynical or bitter experience of Scottish Enterprise as being great at putting out the initial press release, but when it comes to taking tangible, practical measures to help communities—I do not need to tell my hon. Friend the Member for Dumfries and Galloway or the Minister this—it comes into such situations with great promises but 10 years later everyone is scratching their heads and looking for the diversification it is supposed to have delivered.

I am conscious of the time and the important contributions that will be made by the two Front Benchers. On the other issue I mentioned, Mosmorran plant, which sits just over the border with the constituency of my right hon. Friend the Member for Kirkcaldy and Cowdenbeath, is celebrating its 30th anniversary this year. Natural gas is brought ashore at St Fergus, primarily from the Brent field and from the Goldeneye field in the North sea, and is brought down from there in a pipeline that is about 140 miles long—my calculation might be slightly off—to Mossmorran, where it is split. The ethane goes across from the Shell plant to the ExxonMobil part of the plant, where it is heated to 800° so that it can be cracked, to use the scientific term, and turned into ethylene. Of course, ethylene is a daily part of our lives, as it used in a huge variety of products—perhaps even in the cups we are using today.

That work sustains jobs for more than 200 people, many of whom are my constituents. They will be looking to see that when we talk about long-term sustainability for the oil and gas industry we make sure that those crucial scientific jobs, which are also highly sought after, often by graduates—in both Parliaments we talk so much about encouraging those sorts of jobs—are protected. We need to see genuine substantive steps to do that for the sake of our constituents and their families. I hope that the two Governments will set point scoring aside and get on with standing up for all of our communities, whether they be in Aberdeen, Glasgow, my own area of Fife or across the border.