We have a world leading oil and gas industry in Scotland that the whole of the UK can be proud of. As the energy minister at the newly formed Department of Business, Energy and Industrial Strategy I want to be clear that the UK Government is committed to supporting it.
The last few years have seen an unprecedented challenge to this sector. While Oil and Gas UK’s recent economic report highlighted that there are still difficult times ahead, there were a number of positives to take from it – such as the fantastic work that has gone on in the last few years to improve cost efficiency. On average, a barrel of oil now costs operators around $16 to produce, nearly half as much as two years ago when it averaged close to $30.
This clearly shows how resilient and adaptable this industry is and I want to assure the workforce, families and businesses in Aberdeen that rely on it that the UK Government knows the challenges they are facing and, where it is in our power to do so, we are helping.
Last Saturday, we officially established the Oil and Gas Authority (OGA) as a strong, independent regulator, giving it new powers to help us get the most out of our oil and gas reserves.
When asked by the Government to undertake an independent review of the industry, Sir Ian Wood, founder of the multinational oil and gas company Wood Group, said that the creation of an arms-length regulatory body was essential to its future success. We listened, and now the OGA can act with greater speed and flexibility to attract investment, support jobs and further the UK’s competitive edge in the oil and gas industry.
On his recent visit to Aberdeen, Greg Clark, the Secretary of State for Energy, was clear that the oil and gas industry will be at the heart of our industrial strategy, and we will continue to work closely with the OGA and the industry to secure its future.
Although the oil price is dependent on global factors beyond our control, we have taken significant steps over the past two years to support the industry financially through a package of measures worth £2.3billion – action which was only possible because of the broad shoulders of the wider UK economy.
However, as a former business woman, I know that we must think widely when finding solutions. This industry needs a future, and that means more exploration to uncover the vast potential that is estimated to still be out there. We want to help the industry to go out and discover that potential, and that’s why we’ve committed £40million to new seismic studies over the last two years, and the OGA has already invited companies to apply for licences for over a thousand new sites.
Our focus is also on those individuals working tirelessly at the frontline of this industry, as well as those who have sadly lost their jobs. Ours is one of the most highly skilled workforces in the world, and we want to ensure that we hold on to that talent. That’s why we’ve published the oil and gas workforce plan. This includes action to expand the Talent Retention website (used by over 1,000 companies in the engineering and manufacturing sectors) to include a specific section for oil and gas workers, giving them greater access to opportunities in other sectors.
I’m convinced that our oil and gas industry is one of the most adaptable, and we will work together to put the industry in the strongest possible position. You can be sure that despite all the recent changes, the UK Government’s commitment to the future of this important industry has not wavered.
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