An industry chief is optimistic that government policies axing support for fossil-fuel-related export activity still give scope for the oil sector to “have its cake and eat it”.
John Pearson, chief operating officer of Petrofac’s engineering and production services division, did warn the policies could have “unintended consequences” if implemented “bluntly”.
But Mr Pearson said industry and government were “properly consulting” on the issue and that a “happy outcome” is possible as long as wisdom prevails.
The UK and Scottish governments have both announced plans to withdraw taxpayer backing and trade promotion for UK supply chain export activity that serve overseas fossil-fuel projects
Westminster and Holyrood said there would be exemptions for those providing goods and services for projects which support the energy transition, such as decommissioning.
Bosses from membership bodies Oil and Gas UK and Subsea UK warned that the policies must not “undermine” fragile supply chain firms which hope to play a big role in the energy transition.
Many north-east oilfield service firms are diversifying into renewables, but at present there are not enough large-scale clean energy projects to create sufficient work and protect jobs.
Chiefs are concerned that withdrawing support for these firms’ traditional activities now may jeopardise their chances of still being in business when low-carbon activity does ramp up.
Both governments opened consultations into the policies, which Mr Pearson said were “active” and focused on delivering a “win-win” scenario for industry and government.
He said industry’s “passion” for the subject came from the fact that state development and export finance agencies were often “very helpful”.
Mr Pearson acknowledged that the principles of the intended policy changes were “laudable”.
But he stressed that the “art” would be in implementing them while preserving jobs and building supply chain capability.
Mr Pearson said: “Almost everybody shares the moral objectives of this action. I’ve not heard any real debate about that.
“It’s about how you practically marry that with managing the energy transition, which will be a journey that takes time.
“But there’s plenty of scope to have our cake and eat it.”
He said decommissioning would be a “very valid exception” to the withdrawal of funding support.
And he said policymakers should be “mindful of the timelines” with respect to gas being widely viewed as a “transition fuel”.
He added: “I absolutely believe and hope there’s plenty of room in the consultations to head in the right direction at pace while maintaining key capability in the supply chain and doing the right thing.”
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