Aberdeen oil and gas industry leaders have spoken of their confidence in the region’s economic resilience as a new report shows the sector has less faith in UK energy policies.
The Aberdeen and Grampian Chamber of Commerce (AGCC) released its 38th Energy Transition Survey this morning and called for a new independent body to oversee UK energy security and the net zero transition.
Outlining the survey findings at an industry breakfast, AGCC chief executive Russel Borthwick said despite facing many challenges, the Aberdeen sector appeared confident in its ability to meet them.
“The reason that so many people appear to be confident in this region driving towards solutions is the resilience of the businesses and the people that are based here,” Mr Borthwick said.
“Up to 50% of people (surveyed) believe that this region will find a way to succeed despite the barriers and challenges being put in its way.”
Mr Borthwick said those barriers included the introduction of the Energy Profits Levy (EPL), delays to the release of the Scottish Government’s energy strategy and skills shortages.
In addition, respondents expressed dissatisfaction with the policy offerings outlined by the major political parties in the lead up to the next UK general election.
“Evidence continues to increase that the Energy Profits Levy is having a significantly negative effect on the sector and investor confidence,” he said.
“The Scottish Government’s energy strategy, if they have one, is still having a negative impact on industry sentiment.
“There’s still a high disaffection rating with the policies of all parties when it comes to energy security.”
Election on oil and gas leaders’ minds
The report, which is sponsored by KPMG and ETZ Ltd, shows that government policy remains the biggest factor determining future activity in the UK energy sector.
Speaking at the event, KPMG transaction services director Rob Aitken highlighted that alongside the looming general election, the 2050 net zero deadline was also fast approaching.
“We’re around 9,500 days from the Net Zero 2050 target,” Mr Aitken said.
“That’s only six general elections away and, based on the last 18 month’s run rate, about 54 prime ministers, which makes it sound a lot further away than it actually is.
“We’ve seen some adjustments to the UK approach to net zero, described by the government as more pragmatic, proportionate and realistic, and not necessarily described like that by everyone.”
Mr Aitken said while the UK government has announced a number of policy changes in recent weeks, some welcomed by the oil and gas sector, the obligation to deliver net zero hasn’t changed.
“Cross-party alignment, collaboration and looking to the future might alleviate some of the political frustration,” he said.
“We will have oil and gas in 2050, but it should be net zero and we need the infrastructure that supports that.”
Aberdeen region can be a ‘world leader’
Mr Borthwick said while the Aberdeen business community had seen some success from “whingeing” to government at all levels about their policies, there had been encouraging signs of progress although “there remains much to do”.
“We are a resilient bunch up here and we will deliver on our vision,” he said.
“Oil and gas of course will continue to play a key role in our energy mix for decades to come.
“Significant resources remain in the North Sea basin and we’re starting to see, at least the current government, committing to that point.”
Mr Borthwick said the future of the region’s economy depended on the policy decisions made by government.
“We have a world class energy cluster here with supply chains, skills, infrastructure, universities,” he said.
“It’s all here in this region, punching above our weight.
“We could lose 17,000 jobs and decimate our regional economy if we get this wrong.
“If we get this right, there’s an upside that the 45,000 jobs could become 54,000 jobs and really be the thing that powers this region’s economy for decades to come, as well as a significant infrastructure and regeneration pipeline.”
Mr Aitken echoed Mr Borthwick’s view that the Aberdeen region had every opportunity to succeed in meeting the challenges of the energy transition.
“We have all the attributes (in Aberdeen),” he said.
“We’ve got the geography, we’ve got the geology, and we’ve got the skills to be world leaders but there’s still work to do to up that momentum.”