Supporting our oil & gas industry

9 Nov 2020

Thank you all for joining todays virtual discussion.

It is good to have the opportunity to talk to workers and representatives from the oil and gas industry this morning

Because this industry is facing acute challenges right now, both as a result of long-term trends,

and due to the crippling effects of the pandemic.  A pandemic that we’re all having to adjust to.

The North Sea oil and gas industry is a totemic part of Scotland’s economy.

Yet in politics and government, we can too often take for granted the employment that it supports and energy security that it provides.

Instead of talking about how we tackle the immediate issues that the industry faces or of a positive vision for the future,

Too much of the rhetoric is framed around managing decline or on transitioning towards renewables.

So I want the focus today to be on your jobs.

What we can do to support them now and how we secure them for the long-term.

And I believe the best way we can deliver that is by showing that the North Sea oil and gas industry has a long and sustainable future ahead.

One that can continue to offer rewarding, fulfilling careers for you and future workers for decades to come.

But that requires our governments to share in and support that vision.

That is why I wanted to take this opportunity with you today, to reiterate my support for the industry at this time,

and to hear your views on its future and the work that Scotland’s two governments can do to support your jobs.

But before we open up the discussion, let me first set out some opening remarks on my priorities for supporting our North Sea oil and gas industry.

This industry is one of the pillars holding up the Scottish economy.

It is worth 9 per cent of our GDP, bigger than our tourism and financial services sectors,

and supports over 100,000 Scottish jobs, many of whom are based here in Aberdeen and Aberdeenshire.

with an estimated 2,000 Scottish companies involved in the supply chain alone.

Generations of Scots have been inspired over five decades to work on ‘the rigs’ or at onshore facilities.

Attracted by the promise of a stable job and the high wages that the industry can offer.

And it continues to supply a large share, 45 per cent, of the energy that we use every day.

The North Sea oil and gas industry is not just an important part of our economy, but also the lynchpin of many communities and essential to our everyday lives.

However, it is also an industry that is facing challenges.

The North Sea is a mature basin, we are two decades on from peak production.

As such, the remaining oil and gas reserves are going to be more difficult to extract, compared to those elsewhere in the world.

There is also the issue of industry growth being held back by a skills shortage.

And there is the perceived contradiction of maintaining a large oil and gas industry, while delivering a net zero economy by 2045.

On top of all this the pandemic has hit oil prices and led to increased costs from having to follow social distancing guidance and test and trace rules on offshore facilities.

As I have said, the oil and gas industry is vital to Scotland’s economy.

It is too important and supports too many jobs to be left to face these challenges alone.

For decades, government has reaped the benefits of a thriving North Sea oil and gas industry, that has paid £350 billion in production taxes over fifty years.

Since they have shared in the proceeds of the industry it is right that our governments support it at this challenging time

Both the UK and Scottish governments have a role in working with the industry to tackle the immediate issues and set a path for its future.

So that North Sea oil and gas can continue to be a major employer for decades to come.

But how should government support the industry?

Firstly, we must ensure that businesses are not having to close because of the restrictions put in place to tackle Covid-19.

This will have increased costs for businesses in production and those in the supply chain,

That is why I campaigned for the continuation of furlough in Scotland and welcomed Rishi Sunak’s announcement on Thursday of an extension of the scheme to March.

That announcement will be a lifeline to businesses across the country, including in oil and gas, and will save tens of thousands of jobs.

But getting the guidance right is also important in ensuring that businesses can continue to operate.

We all accept that there are necessary precautions that we need to follow to tackle this virus.

But we also know that eight months into the pandemic, with a vaccine still some way off, we need to learn to live with – as well as control – Covid-19. 

We all know that we need to self-isolate and book a test in the event that we get alerted that we have come into contact with someone who has tested positive for coronavirus.

If that test is negative then you can go about your business as you were.

The point is to stop the spread of the virus not to needlessly stop people from going about their lives.

And we know that the virus spreads when people are in close proximity to one and other and are traveling across the country.

The exact conditions faced by offshore workers.

So, it is right that there is mandatory testing before workers are mobilised and that facilities offer offshore testing.

Yet under the current guidance, test and protect rules continue to apply offshore,

even if a worker has been tested negative beforehand and can be tested again onsite.

They must be flown offsite to self-isolate and to do another test.

Now I understand why the initial rules were blunt, we were all facing an unprecedented situation

But as I said we are now having to live with the virus,

And that should mean doing our best to avoid businesses having to pay unnecessary costs at a time when they are already struggling.

It is why I have called on the Scottish Government to establish a Coronavirus Business Advisory Council

to advise on restrictions and ensure that the guidance is as practical as possible for businesses.

And it is why I urge UK and Scottish Government ministers to work together on delivering an exemption for offshore facilities from the need to self-isolate and test onshore.

Because in the absence of a vaccine we need to listen to businesses on how we can evolve guidance where it is safe to so.

That is the only way that we can rebuild our economy while still managing the virus.

Then there is the role that both of our governments need to play in supporting the North Sea oil and gas industry for the long term.

Naturally a lot of the political focus in energy right now is on renewables.

That is only right, we all want to see a greener economy and to meet our net zero target in 2045.

Especially when we are holding the COP26 climate change conference next year.

Yet too often that can lead to easy soundbites around stopping production and turning off the taps, instead of an appraisal of the reality of the facts.

As I have said, over 100,000 jobs in Scotland are reliant on the oil and gas industry

And so is almost half of our current energy needs.

That is something that we cannot afford to lose right now.

Yes, some workers can be reskilled onto renewables but for others that is not an easy fit.

Certainly, there are not tens of thousands of vacant jobs in renewables waiting to be filled.

And renewables will not fulfil all of our energy demands in the near future. 

So instead we will be looking at even more foreign imported natural gas.

Even more US fracked shale gas being shipped across the Atlantic to Grangemouth.

Contributing more to emissions and little to Scottish jobs and tax revenues.

So if we are going to need our Scottish North Sea oil and gas industry for decades to come.

Both of Scotland’s governments need to work together on securing its future.

As a result of Scottish Conservative lobbying, the UK Government allowed companies to transfer tax histories for oil and gas fields.

Reducing the cost for new entrants to decommissioning or maintaining older wells.

We also pushed for an oil and gas sector deal to be delivered in our manifesto last year.

And under my leadership, the Scottish Conservatives will continue to press our governments to do more for the industry.

Which is why we welcome the UK Government’s commitment to a North Sea Transition Deal.

That will deliver a just transition to protect jobs.

We share the industries’ hopes that it is ambitious and delivered sooner rather than later.

But here in Scotland, the UK Government’s role in transition and in supporting the industry is only half the story.

The Scottish Government also has its part to play in delivering the infrastructure and skills we will need to make this a success.

The City and Region Deal model is a success because both governments invested in partnership towards a single plan.

Here in Aberdeen it delivered the Oil and Gas Technology Centre, a world leading hub of expertise in the industry.

This is a model that has worked and that we should use again for this sector deal.

I want the UK Government to involve the Scottish Government in its plans.

And I want the Scottish Government to commit to matching the funding package that the UK Government delivers.

This will ensure that we do not just deliver innovation as part of this deal, but the roads, port upgrades and most importantly skills that we will need to secure the industry for the future.

And while we are on the subject of collaboration, the industry has to work within both a Scottish Government and a UK Government energy strategy.

Preparing for 2045 and 2050.

While I recognise that different governments of different political persuasions will have separate goals,

Where possible they should come together to deliver an overall vision for the industry.

That is why I believe that the Scottish and UK Government’s should establish a joint North Sea Ministerial Working Group.

As a permanent body for aligning governments strategies and investment priorities, like the sector deal.

In addition, we need to see government deliver on its promises to the industry.

We have seen too many examples of delay and abandonment.

One example of this is carbon capture and storage.

I welcome the fact that the UK Government has committed to spending £800 million to incentivise the creation of two CCS clusters.

But I remember the outstanding commitment to deliver a cluster north of here at St Fergus.

So, I urge them to make that promise a reality.

And for the UK and Scottish governments to work together for the oil and gas industry.

Yet supporting the oil and gas sector directly is only part of the solution, we must also back suppliers.

The industry is supported by hundreds of businesses on the supply side. 

Many of these businesses have premises in Aberdeen and Aberdeenshire.

The North East hasn’t seen the investment it deserves and feels hard done by after decisions taken in Edinburgh seem designed to suit the central belt more than regions in the North East corner of the country.

We have to be bold and ambitious to support businesses across the country and we do that by listening to what they are saying.

Aberdeen faced tougher restrictions long before they were introduced elsewhere and the financial backing from the Scottish Government failed to scratch the service.

The North East’s voice has gone unheeded for too long and that must stop.  This vital region for our country has to be treated far more fairly and I will continue to make the strongest possible case of businesses in this area and the jobs they provide.

The industry is also facing a skills shortage right now which is holding back potential long-term growth.

That is in part because there is still a gender problem at the heart of the industry.

Women represent just three per cent of the current offshore workforce.

This is a deep-rooted problem in our education system, with not enough girls taking up STEM subjects in our schools.

It is why the Scottish Conservatives believe that every primary school should have a dedicated STEM teacher to encourage interest at an early age.

But we also need to see STEM teaching tailored towards the skills that our economy, including the oil and gas industry, needs.

To achieve this, the Scottish Government and education providers should work with science and technology based industries on individual employer-led STEM skills strategies,

to deliver the expertise they need through our school system,

but also to tackle the gender imbalance that still exists in science and technology roles.

In addition, we need do more to make the North East a more attractive place to live and work,

That means investment in the necessary infrastructure, housing and broadband, to make skilled workers and their families want to live here.

By standing up for North East suppliers,

Investing in industry led STEM teaching to tackle the gender gap.

And delivering better housing and services.

We can ensure that Aberdeen remains the global centre of excellence for oil and gas.

The North Sea oil and gas industry has a long future ahead of it.

It can thrive and grow alongside a thriving and growing renewables sector.

This is not a competition, we are going to be reliant on oil and gas for a large part of our energy for years to come.

The question is whether this comes from a domestic sector that is supporting tens of thousands of Scottish jobs.

And is still paying hundreds of millions of pounds in tax each year.

Or more foreign imports that will do neither.

My party chooses to back the Scottish oil and gas industry and the jobs that it provides.

We will encourage the UK and Scottish governments to work together,

To support the industry now in its current difficulties and secure its future for the long-term.

And we will continue to promote the policies that will protect your jobs.

As we deliver a net zero economy by 2045.

These are difficult times for your industry, but with the support of our two government’s, we can create opportunities again and show there is bright future ahead for North Sea oil and gas.