Scotland’s oil and gas industry has a vibrant future.
Yes, there’s a sharp reduction in investment, in jobs and in projects but the strength of skills and experience built up over the decades will sustain the industry and ensure it remains a significant contributor to the Scottish economy for decades to come.
It’s now six months since the First Minister announced the creation of an Energy Jobs Taskforce to help support Scotland’s oil and gas sector through the current challenging period.
It’s not much longer than a year ago that the offshore helicopter operators were expressing real concern over the lack of experienced pilots being attracted into the industry.
At the time this problem was being blamed on the smaller number of trained personnel leaving the armed forces.
That particular problem has now solved itself but not – sadly - in a good way. The announcement that Bristow is to reduce their staff levels by 130 personnel which includes around 66 pilots implies a rapid reversal of fortunes for that operator and I’m sure others will eventually follow suit.
The eagerly awaited Energy Bill was published on Friday, setting out the proposed new statutory powers anticipated by the Oil and Gas Authority (OGA) Framework Document published in April of this year.
The Bill sets out the details of the tools that the OGA will use to implement the MER UK Strategy, working in conjunction with other governmental departments and the oil and gas industry.
Undoubtedly it is the new powers to be conferred on the OGA – rather than simply the transfer of existing powers from the Secretary of State – that will be of particular interest to those in the sector.
Twelve months ago, the Wood Commission report ‘Education Working for All’ set out in front of parliament, the need for closer links to be forged between educational establishments and businesses to ensure a future for the country’s young people and ultimately strengthen the economy.
Led by Sir Ian Wood, among the issues the document identified was the significant change required by schools, colleges and employers to challenge the cultural misconception that vocational training is less important than a purely academic route.
The Commission prescribed the need for long term partnerships to be established between secondary schools and employers within three years. And by 2020, it recommends that the quality of both work experience programmes and career guidance should be increased significantly and made available to every pupil.
Many of us are old enough to remember buying vinyl albums. After you bought a new one, you would study every detail of the cover, and, then, you would play it repeatedly until you knew every track.
Not only that, you knew the order of the tracks.
I find good music inspirational. Some of you will already know that I write a weekly message on Core Values to my employees, and I always use a musical reference as a hook.
So today, I want to share my playlist for leading in difficult times.
The UK Government’s decision to widen the scope of the investment allowance in the Summer Budget is a positive measure, and something which the Scottish Government has previously called for – however, this Budget represents a missed opportunity for the North Sea.
As the First Minister outlined at the Oil & Gas UK Conference last month in Aberdeen, and as I reiterated in my letter to the Chancellor, further action is still required to incentivise exploration, promote stability across the industry and boost investor confidence.
The Scottish Government’s latest summary of the oil and gas sector identified the North Sea as the largest oil producer in the EU by a considerable margin and the second largest gas producer in the EU after the Netherlands, supporting around 200,000 jobs and with a supply chain with international sales of more than £11billion.
Yesterday’s Summer Budget – the first wholly Conservative Budget in almost two decades - had no surprise announcements for the oil and gas sector, however the Chancellor highlighted that measures announced in March would be going ahead. This included a new “simple and generous” tax allowance for investment and a rate cut for both Petroleum Revenue Tax and the Supplementary Charge.
Prior to the last general election, George Osborne would have scoffed at the possibility of being able to deliver the first Conservative budget in two decades.
With continued signs that investment in the UKCS is falling rapidly, it is vital the scope of the Investment Allowance, announced in the March Budget, encourages all forms of productive investment if it is to provide the strongest engine for growth.
We are pleased to note the Government has taken steps to extend this allowance as they previously proposed and eagerly anticipate the required legislation by the end of the summer.
In addition, the announced two per cent cut in corporation tax over the next five years, will support companies throughout the sector’s supply chain and help its competitiveness.
Brazilian state-run oil company Petrobras is looking to sell some of its biofuel assets as it tries to raise cash to cover investment for new offshore oilfields and service its debt, Reuters reported, citing two sources.
The company, whose $125 billion of debt is the biggest of any oil company and the third-largest of any non-financial enterprise, plans to sell as much as $13.7 billion of assets by the end of 2016.
The first source, who has direct knowledge of Petrobras' plans, said the company's ethanol plants, which transform sugarcane into fuel, were the most likely area of the business to be sold. Petrobras has nine ethanol plants and five biodiesel plants.
Marathon Petroleum Corp is preparing to restart the 60,000 barrel per day (bpd) gasoline-producing Fluidic Catalytic Cracking Unit 1 at its 451,000 bpd Galveston Bay Refinery in Texas City, Texas, said two sources familiar with plant operations.
Marathon could begin restarting the unit, which has been shut since Jan. 13, as early as Friday, the sources said. If there are no problems with the restart, the FCCU is expected to be back in production by June 26.
A Malaysian naval vessel has located the hijacked tanker Orkim Harmony in Vietnamese waters and is trying to persuade the pirates onboard to surrender, promising them they will be unharmed, Malaysian maritime officials said on Thursday.
Both the crew and the cargo are safe, and the navy is in the midst of negotiations with the robbers, officials with the Malaysia Maritime Enforcement Agency (MMEA) said in a press briefing in Kuala Lumpur.
Malaysia's Chief of Navy Admiral Abdul Aziz Jaafar said on his Twitter account that at least eight perpetrators were on board the Orkim Harmony armed with pistols and machetes.
UK-based Sequa Petroleum has reached agreement to buy a portfolio of Norwegian offshore field interests for $602 million from Wintershall, the oil and gas subsidiary of BASF, the companies said on Thursday.
Sequa said the transaction will be conducted by Oslo-based Tellus Petroleum Invest A/S, which it is also buying in a concurrent deal for $4 million plus 6 million shares in Sequa.
The agreement with Wintershall will give Tellus interests in five fields - 20 percent of Knarr, 15 percent of Maria, 10 percent of Yme, 6.5 percent of Ivar Aasen and 4.5 percent of Veslefrikk.
Russian and Saudi oil ministers plan to discuss a broad cooperation agreement on Thursday at an economic forum in Russia's second city of St Petersburg, two sources told Reuters.
North-east oilfield support services firm Asco has struck a deal worth more than £50million with Marathon Oil UK for work in the North Sea.
The five-year contract will see Asco provide a range of integrated oilfield services to support Marathon’s Brae field operations.
Commenting on the award, Craig Lennox, Asco’s chief executive for Europe, said: “Asco has supported Marathon Oil for many years and we are delighted to secure a new long term contract with them.
Trade unions have shelved plans for a strike action ballot over North Sea working conditions following negotiations with industry bosses yesterday.
Last night the Unite union said the Offshore Contractors Association (OCA) tabled an improved offer for offshore workers during the latest round of talks in Aberdeen.
Unite regional officer Willie Wallace, said: “Today’s talks have been constructive and we have made enough progress to be able to put an improved offer from the OCA to our membership."
Igor Sechin, the head of Russia's top oil producer Rosneft, said on Wednesday the United States is calling the shots on global oil markets, while the influence of OPEC has shrunk.
The United States emerged with renewed vigour as a top producer thanks to its shale boom. By refusing to curb its output to prop up oil prices, OPEC has tried to maintain its share in the global market, shrugging off lower prices which damage U.S. producers.
Russian gas company Gazprom may offer up to 49 percent in its Baltic LNG project to a strategic partner and the most likely candidates are Royal Dutch Shell or a consortium of Japanese firms, Russia's Kommersant newspaper said on Wednesday.
The agreement may be signed this week during an economic forum in Russia's second city of St Petersburg, it reported, quoting sources in the gas industry.
Canadian oilfield services provider Calfrac Well Services halved its quarterly dividend to 6.25 Canadian cents per share, citing lower crude oil prices and weak demand for oilfield services.
Calfrac's board also approved an additional capital of about C$12 million for 2015 to expand in Latin America, the company said on Wednesday.
A meeting between the head of Russia's Gazprom's and Turkish Energy Minister Taner Yildiz is expected to be rescheduled for next week as both sides strive to finalise agreement on a proposed underwater gas pipeline to Turkey, a senior energy ministry official said on Wednesday.
Turkey was named as Russia's preferred partner for an alternative to its planned South Stream pipeline to carry gas to southern Europe without crossing Ukraine after Russia aborted the project in December, citing EU objections.
National Oilwell Varco, the largest U.S. oilfield equipment maker, said it will cut its Norwegian workforce by 1,500 by the end of this year as low oil prices have reduced investments.
It plans to cut 900 permanent jobs and 600 contractors, the firm said in a statement on Wednesday.
Oil and gas firms need to cut costs by up to 40% a barrel to prolong the production life of the North Sea, a new report says.
It urges energy firms to implement seven key tactics used by the aerospace, automotive, chemical, and rail sectors to lower costs and manage performance during hard times.
The report, from professional services firm PwC and the Oil and Gas Industry Council, will be officially launched at the Oil and Gas Industry Conference (OGIC) 2015 in Aberdeen today.
The north-east can carry the torch for Scotland in the crusade to reduce unemployment among the country’s young people, Sir Ian Wood told the region’s fledgling jobs taskforce yesterday.
Sir Ian, the former chairman of energy giant Wood Group, said the area was in far better position than other parts of Scotland to meet ambitious employment targets put forward last year in his commission’s report into youth joblessness.
He added: “We are very lucky in this part of Scotland. In terms of prospects, we have got a whole bunch of youngsters, whether we call them technicians or tradesmen, who are 25 to 30 years old and they’re earning up to £50,000 a year.
Sinopec, the world's second-biggest oil refiner, is on the hunt for minority investments in U.S. shale oil and gas projects as it seeks to diversify China's supply sources, a senior company official said.
The Chinese state energy firm is keen to take a 10-15 percent stake in projects to export liquefied natural gas (LNG), said Jack Yu, managing director of Sinopec D.C., which handles government relations in the U.S. Previous talks over investing in Freeport LNG's project in Texas fell through, he said.
New deals, if they materialize, would come more than two years after Sinopec made waves with two big U.S. investments, spending more than $3 billion buying various shale stakes from Devon Energy and Chesapeake Energy.
U.S. regulators have given the green light for Royal Dutch Shell's proposed $70 billion acquisition of British rival BG Group, the first clearance for the biggest deal in the energy sector in over a decade.
The two companies said on Tuesday the United States Federal Trade Commission (FTC) had cleared the deal.
The deal, which the companies aim to complete by early 2016, will require further regulatory clearances from all the countries BG operates in, including the European Union, China, Australia and Brazil.
