Future of the Oil and Gas Industry
Debate between Deidre Brock and Douglas Chapman(5 years, 2 months ago)
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Douglas Chapman (Dunfermline and West Fife) (SNP)
It is a pleasure to serve under your chairmanship, Mr Walker. I thank the Committee members and the witnesses for helping to reach the well-considered conclusions and recommendations, and I thank the Chair, my hon. Friend the Member for Perth and North Perthshire (Pete Wishart), for his push to consider matters of real significance to Scotland. If one sector has been a dominant industry in the political discourse of Scotland in the past 40 or 50 years, it has been oil and gas.
Today’s Scottish oil and gas sector is in a strong position. With up to 20 billion barrels of oil equivalent remaining, there is enough to sustain production for the next 20 years and beyond. Recent discoveries such as the Capercaillie and Achmelvich wells by BP, the huge and significant gas reserves west of Shetland and Clair Ridge, and Nexen’s phase two of developing the Buzzard field, demonstrate the significant untapped potential that this industry holds should we wish to exploit reserves.
Figures published in the last week by the Oil and Gas Authority forecast that 11.9 billion barrels will be extracted by 2050, up almost 50% from the estimated 8 billion barrels predicted just four years ago. That is why the Scottish Government are keen to do everything they can to support the industry and its workforce. In 2016, the Scottish Government launched a £12 million transition training fund to help oil workers retrain and make the most of their transferable skills to forge careers in other sectors. Some 4,000 applications have been approved, with training satisfaction at around 90%.
We have helped the Scottish supply chain to capitalise on an expanding decommissioning market that is forecast to reach £17 billion by 2025. The decommissioning challenge fund has offered grant funding of £3.1 million for projects focused on delivering innovative infrastructure improvements and technological advances in this area. As part of the Aberdeen city region deal, the SNP has committed £90 million over the next decade to support the Oil & Gas Technology Centre.
We are looking at an uplift of over £194 million in the enterprise and energy budget to support entrepreneurship, construction and productivity. That additional funding will contribute to an investment of almost £2.4 billion in enterprise and skills through our enterprise agencies and skills bodies.
The Scottish Government offer an impressive range of support for the industry. As we move forward, I hope the UK can step up to the plate and do more to support the industry as it moves into its next phases of production. However, successive Tory and Labour Governments have continually exploited the oil and gas industry for cash, with little regard for its future sustainability. They have been quite content to rake in a tax take of £350 billion from North sea revenues alone over the past 50 years. The Tories failed to deliver any real fiscal support when the sector was in depression after the oil price dropped. I hope that is a lesson learned. This is an extremely important sector for the future, and we need to support it to allow it to continue, maintain jobs and transition out of oil and gas into other areas.
Deidre Brock
On successive UK Governments’ management of the oil resource, I should say that in recent years Norway’s state-owned oil sector has generated many billions of pounds in Government revenue, while the UK has lost many. Does my hon. Friend agree that that points to a gross mismanagement of this valuable resource over many years by successive UK Governments?
Douglas Chapman
My hon. Friend makes an excellent point. Norway’s population is very similar to Scotland’s and it has a similar ability make good from the resource it found on its doorstep. It now has the world’s largest sovereign wealth fund, yet in Scotland and the UK we have not put anything aside for future generations. That is a huge lost opportunity for the industry and the UK people.