Aberdeen can reap the benefits from an extra £376billion of oil and gas revenue, given the right funding, investment, tax regime and public/private-sector collaboration in the North Sea, a new report says today.
According to professional service firm PwC, the Granite City is at a crossroads, with two possible outcomes: the prize of being a global energy capital for the next 40 years, or declining prosperity.
The report, Northern Lights, also says the city has every reason to look forward to a bright future, with as much as 24billion barrels of oil left in the North Sea, exploration west of Shetland, decommissioning business and a growing offshore wind industry.
It adds, however, that there is a dearth of young talent and suggests the city sets up an energy academy.
It also urges the UK Government to view the North Sea as an opportunity for investment and not a cash cow.
PwC’s report says: “The city and the industry should focus on publicising and talking up the opportunities for growth and thereby dispelling the perception of managed volume decline.
“Aberdeen has reached a crossroads.
“Business as usual and the possibility of a managed decline, or all the stakeholders collaborating to grasp the many opportunities within reach.”
The report comes just 24 hours after the chief executive of industry body Oil and Gas UK, Malcolm Webb, said that a resolution to the damaging tax crisis imposed on the oil and gas producers in the UK budget would be game changing for the industry.
He was speaking at the annual Pilot Share Fair event at Aberdeen Exhibition and Conference Centre, which had a record attendance of more than 1,100 people.
Mr Webb said that there had only been two major asset sales since 2008, while exploration and appraisal drilling had slumped by 40% this year.
The March Budget and issues over decommissioning were factors in both cases, he added, however, he said there was now a real prospect that by next year’s Budget there would be new measures, such as field allowances, to mitigate the damage done plus a possible resolution to the decommissioning uncertainty.
Mr Webb said the formation of a fiscal forum between the Treasury and industry was also encouraging.
He added: “If all of these come together, it could be a game-changing event for the UK North Sea.”
Opening the event, Scottish Secretary Michael Moore said the government recognised the contribution of the industry to the economy.
He added that recent developments in the UK North Sea, including BP’s £4.5billion Clair Ridge development, showed it remained attractive for investment.
He said: “Many are concerned with the tax changes in the Budget and we understand and agree we must keep the channels of communication open to discuss tax and related matters.
“We recognise the importance that to have continued investment in the North Sea marginal fields need to be developed.
“We are also committed to working on decommissioning, with a view to announcing longer-term certainty in the Budget 2012.”