A North Sea leader has warned that more jobs will have to be cut in the sector despite a “regeneration” package announced in the Budget.
Malcolm Webb, chief executive of Oil and Gas UK, said the industry must put pressure on itself to reduce costs and improve efficiency, but urged firms to do it in a “careful” way.
He was speaking the day after the Treasury met demands for greater support during the downturn, announcing cuts to the supplementary charge, petroleum revenue tax and incentives for exploration.
Scottish Secretary Alistair Carmichael claimed on Wednesday that the measures would help protect thousands and potentially tens of thousands of jobs.
However, Mr Webb said there were still difficult decisions to be taken in the offshore sector.
“I think the industry will come under pressure, which it needs to put on itself frankly, to get on top of its cost and efficiency challenge,” he said.
“Our costs have got out of control, and we’ve got to bring them back into control. There can’t be any lack of pressure on that. That’s where the focus needs to be.
“The industry does need to be careful the way it goes about cutting its costs. Unfortunately there will be some job losses.
“It needs to be careful about the way that it does that – I think it would be the wrong signal for example to be heavy handed in laying off apprentices or people coming into their career, we need to be sensitive.
“But unfortunately, if we are going to do something about costs, it does need to be that some job losses have to happen.
“It would be wrong to say everybody must keep their jobs, I’m afraid that would be an unrealistic attitude to take.”
Mr Webb admitted that he did “have a concern” that taxes could go back up when prices rise, but believed there was now cross-party recognition in the need for stability.
“It would be a heck of a volte face for this government, or any of the constituent members of the coalition government to turn around now and do that. And we have had very good discussions with both the Labour and the SNP as well,” he said.
“I detect the same sort of political alignment around the tax treatment of the North Sea, as there was around the Wood Report.”
The Budget completely reversed the infamous 2011 supplementary charge rise, which almost wiped out investment at a stroke.
Asked if the industry would have been better able to weather the current storm without that rise, Mr Webb said: “Probably. I think so.
“It does got back to that point that governments really must resist the temptation to grab the cream as soon as it arrives.
“I think the very depressing numbers on exploration have got something to do with that instability, and the view that in the UK they constantly change the tax rules.
“But I think what the chancellor did the other day was very, very helpful, because it paints a picture which is very different to that, and that’s very important.”
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