Opinion: Challenging times call for radical measures

Lewis Macdonald , MSP.
Lewis Macdonald , MSP.
Opinion by Lewis Macdonald

Challenging times call for radical measures, and in the North Sea oil and gas sector these are certainly challenging times.

This is not the first downturn in the forty-year history of North Sea oil, but it is potentially the most serious.

The difference this time is that production has long since passed its peak, and many marginal fields are at risk of closing down altogether.

The other big difference is the sheer age of the offshore infrastructure. Keeping platforms in production and pipelines flowing gets more expensive with every passing year.

So it is not going to be enough just to wait for the upturn to follow the downturn. We cannot simply rely on market forces or the economic cycle to deliver the investment we need when we need it, because for some fields and some assets the upturn is likely to come too late.

Active regulation is part of the answer. The Oil and Gas Authority has been tasked with promoting effective co-operation in the sector, in place of wasteful kinds of competition that have characterised the North Sea in the past, and it has powers to insist that individual companies should not put their own short-term profits ahead of the shared vital interests of the sector as a whole.

We also need active trade unions in the North Sea. The five offshore unions came together in a new Offshore Co-ordinating Group earlier this year, representing helicopter and vessel crews as well as those working on rigs and platforms. It is vital that the voice of the workforce is heard in the months ahead.

But, as my own union Unite has argued, we also need to look to the public sector as an active partner in the North Sea. The continuing success of the sector is not just important to the people who work in it; it is also an important driver of the wider Scottish and British economies.

Just as Aberdeen City Council this week became the first Scottish council to issue its own bonds to pay for vital onshore infrastructure, so the UK and Scottish governments should use their borrowing powers to help leverage the capital required to pay for infrastructure offshore.

Decommissioning, when it comes, will involve billions of pounds in tax benefits for oil companies, at the taxpayers’ expense. Public investment to stimulate continuing production will not only help protect jobs and increase revenues, it will also put off the costs of decommissioning for both the industry and the public purse.

A co-investment plan to sustain vital infrastructure would therefore make good economic sense. Commitment from both the Scottish and UK governments would boost confidence in the sector and encourage private investment at a time when it can make the biggest difference.

That is why I will take this debate into the Scottish Parliament, and ask for cross-party support. These are indeed challenging times. The challenge for government is to get behind an industry that has contributed so much in the past, and which with the right policies in place can continue to contribute for many years to come.

Lewis Macdonald is a Labour MSP for North East Scotland