Last week, the SNP’s Dennis Robertson claimed there was no crisis in the North Sea. I doubt if he will say anything like that now.
The oil jobs crisis has just taken a major turn for the worse. The price of North Sea oil has crashed again, BP has announced 600 jobs are set to go, and experts are predicting the price could keep on falling.
It seems that Saudi Arabia would rather sell off its state oil company than allow US shale or exports from Iran to reduce its market share. That is bad news for many other producers, including the North Sea.
Industry commentators were already talking about a price “lower for longer” at the turn of the year, when $50 oil seemed to be here to stay. That price no longer seems low, now that Brent crude is trading at around $30 with no sign of an upturn any time soon.
Andy Samuel, chief executive of industry regulator the Oil and Gas Authority, gave evidence to the Economy and Energy Committee at Holyrood a few weeks ago. He foresaw several possible scenarios, but said there was more reason for concern than for optimism.
That concern has since been justified. The question now is: what can be done in the midst of this crisis to give the North Sea industry the best chance of recovery in the medium to long term?
Not much can be done to influence the global oil price, but things can be done to avoid the premature shutdown of the North Sea, and the Oil and Gas Authority itself is part of the answer.
The OGA is the regulator for the UK oil and gas industry. It has a remit to promote a culture of co-operation in place of the cut-throat competition we have seen in the past, and it has made a pretty good start.
It is also listening to trade union concerns offshore.
But beyond that, the OGA has invested £20 million of public money in seismic exploration in both the North Sea and the North East Atlantic. That investment means the Government is sharing the risk of finding new oil, and results so far are encouraging.
The days of North Sea oil producing billions of pounds in tax revenues to pay for public services are gone. North Sea oil can still support tens of thousands of jobs and many millions of pounds’ worth of economic activity – but only if Government is prepared to invest and share the risk.
Ministers in both Edinburgh and London need to face the stark reality of the oil jobs crisis, and the risk of things getting a whole lot worse. Then they need to work out what they can do to give the North Sea and the North East economy a fighting chance of getting through this crisis in one piece. Then they need to get on and do it.
Lewis Macdonald is a Labour MSP representing North East Scotland
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