North Sea Oil and Gas Workers: Transitional Support
I thank the hon. Member for Aberdeen North (Kirsty Blackman) for securing the debate. To say that it is really important does not really do it justice; what we are seeing in the North sea—job losses, investment drying up and companies folding or choosing to end their UK operations—is not us being alarmist or pessimistic or over-exaggerating. As most of us in this room understand, although that is sadly not the case across the House, those are the cold, hard facts. Across the UK, approximately 120,000 people are employed in the oil and gas sector, of whom approximately half are in Scotland. The average oil and gas worker is in their mid-40s. This is their transition—not a future transition—and it matters now. In the UK, one in every 200 people is employed either directly or indirectly in the offshore energy sector, and that is significantly weighted towards oil and gas work. Those people work offshore on rigs and floating production storage and offloading units or onshore as geologists, geophysicists and petrophysicists and in our crucial supply chains. That increases to one in 25 across Scotland, about one in five in north-east Scotland and one in three if induced jobs are included. The impacts of a poorly managed transition will be felt not just in Aberdeen, Aberdeenshire or north-east Scotland; the entirely of the UK will suffer. No other UK cluster has the energy capability of north-east Scotland—the skills, supply chains, university specialisms or experiences. If we in north-east Scotland lose our brightest, best, most innovative and most experienced energy workers in the transition from oil and gas to renewable energies, they will be lost to the whole of the UK. We must not pretend, or mislead ourselves and others into thinking, that transferring to renewable energies is in any way incompatible with continuing to produce oil and gas from the North sea. It is not. More than that, continuing to support our domestic oil and gas sector will only help any transition to renewables to succeed. Will we still need oil and gas for years to come? Yes. It seems that that point is largely uncontested, and the Government have certainly confirmed it. So why—I still have not heard a coherent answer to this—are they effectively ensuring that we do not have a viable oil and gas sector? Removing investment allowances, increasing and extending EPL levels beyond those for any other mature basin and banning new licences do not support the sector, help domestic supplies or protect jobs. OEUK suggests that 50% of domestic oil and gas needs could be supplied from the North sea until 2050, but only if there are policies to allow oil and gas to be extracted. Brent oil is today at $68 a barrel—almost half the $123 a barrel it peaked at in 2022, and below the EPL price floor of $71 a barrel. Why does the Minister expect North sea businesses to continue in the UK when they are being penalised for their product, despite the Government’s saying that we need it? As others have asked, how can the UK arms of multinational companies compete for funding and investment with energy sectors in other countries, which are so much more supported and encouraged and which offer far greater returns? When investment goes abroad, jobs follow, or are lost. It is that simple. I say it again: our oil and gas sector is vital to the UK’s energy transition. When I speak to people involved in or with the sector, the vast majority talk about timing. Timing is the most crucial thing in supporting the energy transition, and I would like the Minister to reflect on it in his remarks. For offshore wind, for example, the RGU Energy Transition Institute estimate is an increase from approximately 11,000 jobs in 2024 to 46,000 in 2025. On the face of it, that looks great—35,000 new jobs—but more or less all those jobs will come on stream post 2030, by which time, on the current trajectory of job and investment losses, we are expected to lose 60,000 oil and gas jobs, 50% of which will be in Scotland. No skills passport will bring those jobs back. That is not a fair or just transition; for north-east Scotland, it is a disaster waiting to happen. The issue is not just when the jobs need to come on stream; it is the type of jobs, as well as whether companies in the north-east will have remained afloat in the interim. At the moment, there are two main categories of jobs: the vast majority of our energy work is in operational activities, such as the day-to-day operations of the industry, while the remaining third—roughly—are in the capital expenditure, such as the building and manufacturing of kit. However, the manpower requirements for running and operating a rig far exceed those of, for example, a wind farm. Until the UK can increase its manufacturing base for wind infrastructure, allowing jobs to be created in capital work rather than just operational work, there is no prospect of transferring tens of thousands of workers from oil and gas to wind or other renewable energy sectors. Similarly, timing is vital if companies are to keep their order books, if not full, then at least ticking over with traditional oil and gas contracts—again, assuming that the Government’s policies are changed to support the sector—before offshore wind contracts truly pick up. I recently spoke to the chief executive officer of a supply chain company, who had very real concerns about a void in contracts, which the company would not be able to get across, in the next two to five years. What company can retain a workforce if it has no work? These companies are vital to the transition, and we cannot afford to lose them to an expediated, unmanaged decline of oil and gas. The RGU estimates that 80% of the oil and gas supply chain is transferrable to adjacent sectors, but the reality is that the supply chain will survive only if the transition is managed. If we run down production too quickly and before wind is effectively scaled, the capabilities and expertise will be lost. I end with a brief quote from the North Sea Transition Taskforce, which warns: “Unless governments act swiftly, there will be no transition; the old North Sea will fade away, along with the skills of individuals and the entrepreneurial skills of businesses in the North Sea supply chain.”