The First Minister today said the impact of the Covid-19 outbreak on the oil and gas industry is a “big concern” but failed to outline the specific measures discussed to help support the sector.
It comes as a new report released by Oil and Gas UK (OGUK) today revealed up to 30,000 jobs could be cut in the next 12-18 months, mostly in the North Sea supply chain, due to Covid-19 and a 20-year low in oil prices.
When asked during her daily coronavirus briefing to detail what practical measures have been suggested to help support the industry, First Minister Nicola Sturgeon said discussions remained “ongoing” but failed to indicate what these initiatives could be.
She added: “The sector you’re asking me about in particular is oil and gas, which is a big concern given the impact there but these discussions are ongoing across a range of sectors and areas of the economy.
“We’re also, as the Scottish Government, also talking to the oil and gas sector to look at what we can do in Scotland to support the sector and to support crucially the transition to the net zero economy as an imperative that hasn’t gone away despite dealing with coronavirus.
“As we take decisions, as there are specifics around initiatives that we’re able to take, then we will set these out in the normal way but these discussions continue at this stage.”
Speaking exactly a week ago, the First Minister pledged to discuss extra support for the North Sea oil industry, adding she would be raising the issue with the UK Government as well as the industry itself following the collapse of the market caused by the coronavirus pandemic.
After US oil prices fell to below zero for the first time on record, the Scottish Government’s chief economist, Gary Gillespie, said the situation was “volatile” but “with support” the Scottish oil industry would get through the crisis.
Offshore unions have warned that more than 3,500 UK workers – including 1,000 drilling contractors – could be out of work by September and called for an urgent summit with Westminster politicians.
Speaking during FMQs on Tuesday, Jackson Carlaw, leader of the Scottish Conservatives, said the Press & Journal report on the 30,000 jobs which could be lost in the oil and gasindustry served as a “reminder” of the “economic challenge” Scotland faces.
The First Minister said a “final decision” had not been reached but added that “most of the levers” around oil and gas in terms of the fiscal regime lie with the UK Government.
She added: “So perhaps the most important discussion we have to have is with the UK Government who have, they say, been very forthcoming in support for businesses so I hope that will be a productive discussion.
“We will continue to take whatever decisions we can to give maximum support to the economy and different sectors within the economy.”
Mr Carlaw said workers and their families across the north east are “hugely concerned” about the future, adding they would be “disappointed” by the lack of support.
He added: “They need answers now from the SNP government, especially amid such dire warnings.
“But they will be disappointed at the lack of response from Nicola Sturgeon, who appears to be dithering when it comes to support for one of Scotland’s most important industries.
“People in the north east have long suspected that the nationalists just aren’t interested in helping out the oil and gas sector.
“The exchange at First Minister’s questions will do nothing to convince them otherwise.”
‘Bleak situation’
Oil and Gas UK Chief Executive Deirdre Michie said the recent report outlines the “bleak situation” the sector faces, adding the impact will be “especially hard” in communities like Aberdeen.
She added: “We know that the quick slump in activity due to Covid-19 and low oil and gas prices will hit energy communities like Aberdeen especially hard, which is why we’ve set out a three-stage framework for support to both the UK and Scottish Governments.
“This would look to help our industry today by extending furlough, support our recovery by getting us back to work and ultimately help this industry to diversify in support of the low-carbon energy mix of the future by accelerating their net zero plans.”
Call for support
Aberdeen South MP Stephen Flynn said he will “continue his efforts” to get Chancellor Rishi Sunak to take action to support the industry, adding the sector has yet to see a “single sector-specific measure” to support it through the pandemic.
He added: “Oil and Gas UK’s report is a stark warning as to the challenges facing the industry and, as such, the livelihoods of folk living across Aberdeen and the surrounding region.
“It also clearly identifies that the current furlough and loan schemes need to be expanded and enhanced to meet the needs of the sector and only the Chancellor has the power to ensure that this happens.
“The UK Government has talked the talk about an oil and gas sector deal for years now and just as there has been no actual action on this front, we have yet to see a single sector-specific measure put in place to support the industry during this pandemic.
“I will continue with my efforts to try and get the Chancellor to take action that will support industry in the short term, as well as ensuring that measures are put in place to support a just and sustainable approach to energy transition in the longer term.”
The UK Government has talked the talk about an oil and gas sector deal for years now and just as there has been no actual action on this front, we have yet to see a single sector-specific measure put in place to support the industry during this pandemic.
Stephen Flynn, Aberdeen South MP
Asked about OGUK’s report, the Prime Minister’s spokesman said: “The energy minister and the business secretary have been having meetings remotely with representatives from the energy sector, including the oil and gas industry to discuss the impact that they’re facing from coronavirus.
“The oil industry can benefit from the package of support the Chancellor announced to help business through the pandemic, including the offer to pay furloughed workers 80% of their wages up to £2,500.”