Orkney's MSP Liam McArthur used a ministerial statement in the Scottish Parliament to press for concerted action by the UK and Scottish governments, working alongside the oil and gas sector, to help ensure the longer term viability of processing at the Flotta terminal.
The statement by the Minister for Business, Energy and Tourism, Fergus Ewing, was on future prosperity for the North Sea, at the request of the Labour Party. It followed the Offshore Europe conference held in Aberdeen the previous week and the growing concern at significant job losses within the Oil and Gas sector.
A recently published report by Oil & Gas UK estimated that the wider sector could face further job losses on top of the 65,000 lost in the last 20 months.
Following the exchanges with the Scottish Energy Minister, Fergus Ewing, Mr McArthur said:
"The clear message coming out of the Offshore Europe conference last week is that the consistent low price of oil below the cost of production in the North Sea presents a genuine and serious risk to the longer term viability of oilfields, pipelines and processing.
"It is now imperative that the UK and Scottish governments, working closely with the Oil and Gas Authority, redouble efforts to identify a range of creative solutions that will help extend the life of UK Continental Shelf oilfields. Some of that work is well underway and we are already seeing signs that costs are being brought down.
"However, more concerted action is needed. The Minister highlighted the need for attitudes in the sector to change, but also pointed to the success that many companies have had by engaging directly with their workforce on ways costs can be reduced. That seems to be the most sensible approach.
"This will continue to be a difficult and uncertain time for those in the industry and supply chain, including those based at the Flotta terminal. However, I believe that with close collaboration between government, OGA and the wider sector we can avoid premature decommissioning of oilfields and safeguard jobs over the longer term".
Notes to editors: Please see below the Official Report of the exchange after the ministerial statement (15/09/2015). - See more at: http://www.scottish.parliament.uk/parliamentarybusiness/report.aspx?r=10084&i=93105&c=1859416&s=#sthash.V63zimnA.dpuf
Liam McArthur (Orkney Islands) (LD):
I thank the minister for advance sight of his statement. Does he accept that consistent lower oil prices at levels below production costs in the North Sea put the long-term viability of oilfields, pipelines and processing at risk? Will he acknowledge the need for the industry, the UK and Scottish Governments and the Oil and Gas Authority to redouble efforts to find a range of creative solutions that extend the lifetime of the UK continental shelf oilfields and protect the thousands of jobs in the industry and the supply chain, including the very many at Sullom Voe in Shetland and at Flotta, which is in my Orkney constituency?
I agree with the sentiment expressed by Liam McArthur. We cannot control the oil price, nor can the UK Government. Bob Keillor wrote a piece in The Press and Journal recently saying that he cannot control the oil price nor predict what it is going to be. What the industry can do is what it is doing—adapt to the challenges, reduce costs and move beyond that into attitudinal change as to how to get the best.
For example, an operator has increased wrench time by 30 to 40 per cent offshore by listening to its workforce as to how best to organise matters offshore. That is a good practical example, and it is imperative that, if the oil price is to stay around the current level, the industry responds to that change. The impression that I got in Aberdeen was that it is indeed responding to that change and viewing matters positively, although there are still very serious challenges ahead in the next year or so.