Two north-east MPs are seeking an urgent meeting with the energy and climate change secretary over the desperate shortage of capital affecting offshore developers.
West Aberdeenshire and Kincardine Liberal Democrat Sir Robert Smith and Gordon’s Malcolm Bruce will urge Ed Miliband to ensure new Bank of England facilities for large businesses will be made available to help fund the exploitation of new finds and the extraction of the last drop of oil from existing fields.
The proposed facility was announced in the last rescue package announced by Chancellor Alistair Darling.
The move by the two senior Lib Dems follows a dire warning from Oil and Gas UK that up to 50,000 North Sea jobs could be at risk over the next two years because of the credit crisis and global recession.
The pair have already been assured by Mr Miliband that the UK Government recognises the vital role that the UK oil and gas industry continues to play in helping meet the country’s energy needs.
Sir Robert welcomed the possibility of more tax incentives but stressed the need for capital is crucial.
He said offshore developers without resources of their own were finding it difficult to finance developments they had intended to progress.
“The proposed Bank of England facility for large companies needs to look sympathetically at the position of smaller exploration companies,” he said.
“We will be asking the energy minister to ensure that the bank’s new loan facility will provide support for North Sea firms seeking to develop new fields or exploit older ones.
“Of all the sectors hit by the credit crunch this is one that will develop returns to the Treasury in the form of taxes over the next few years – several times the cost of the investment.”
Mr Bruce warned limiting tax incentives to the development of new fields would not be enough.
He said: “Secondary recovery from existing fields has the potential to yield more oil which is trapped and yet to be produced.
“It is admittedly an expensive process but targeted incentives could assist the industry in taking advantage of the current economic environment which favours exploration.”
Meanwhile Offshore Oil and Gas has developed a jobs indicator to show MPs who may not realise their constituents’ jobs are at risk what they stand to loose.
Across the north-east it shows 147,000 jobs are dependent directly or indirectly by the industry.
In Gordon alone 70,000 people – a higher proportion than anywhere else – rely directly or indirectly on the industry and its suppliers.
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