News that the UK Government has incurred a loss from North Sea oil and gas production for the first time since records began is clearly very concerning.
The figures make for painful reading – Treasury receipts of £-24m for 2015/16 compared to £+2.15billion the year before.
However, these numbers will come as no surprise to those working within the industry in the North East.
The comments published yesterday from Paul Goodfellow, Shell’s Vice President for the UK and Ireland, that the North Sea sector was unsustainable even at $110 oil reflect the widespread understanding that the cost base was simply too high.
Indeed, minds in this part of the world have been focused for some time now on ways to bring down those costs and make the industry more efficient and competitive.
Sir Ian Wood, speaking at an event in Aberdeen on Wednesday, praised the work of the Oil and Gas Authority and the collaborative efforts that have helped to improve efficiency, but clearly there is still more to do.
The Conservative government at Westminster has provided significant levels of fiscal support, including packages of tax measures in the last two Budgets worth £2.3billion.
There is also the substantial investment for the longer term in the Aberdeen City Region Deal, which includes an Oil and Gas Technology Centre to support innovation to maximise recovery from the UKCS.
We must also create the right climate locally to anchor our supply chain companies in the North East.
That means more investment in transport and digital infrastructure, a competitive but fair business rates policy and support for those firms that are exporting technology and expertise around the globe.
The Scottish Government has a significant role to play, not least in terms of business rates, but also in terms of skills development and training.
There are questions to answer, for example, on a £12million Transition Training Fund to retrain redundant oil and gas workers as teachers – which was a laudable initiative launched to great fanfare earlier this year.
I have been approached by constituents in Aberdeenshire West who have tried without success to access this funding.
It is vital that efforts to support those directly affected by the downturn do just that, and are not just headline-grabbing soundbites.
Alexander Burnett is the Scottish Conservative Energy spokesman and MSP For Aberdeenshire West
Recommended for you
