Middlesbrough South and East Cleveland Labour MP, Tom Blenkinsop, today (19th January 2014) said that the news that oil giant BP is expected to axe 200 land based support jobs and 100 North Sea offshore contract posts in the coming weeks as a direct result of the impact of low oil prices “is a warning bell” that the Coalition Government now have a duty to look to develop tax and business support strategies to sustain the North Sea fields in “difficult times”.
“BP directly employ 80 workers at their Seal Sands terminal who thankfully do not appear to be at threat, but there are many hundreds, and indeed possibly thousands of Teesside workers who are employed offshore or for locally based companies supporting the oil and gas industry in fabrication yards, wharf-side heavy load applications, marine and subsea engineering or offshore industry training.
“This vital economic linkage – a linkage reflected along the whole of the North East coastline – is why we need a new innovative strategy to support the offshore industry through difficult times.
“We have to understand that North Sea oil and gas, although now a mature industry which peaked in 1999 and has been declining since by 5-10 per cent a year, is still important. The leading industry body Oil and Gas UK calculates that some 42 billion barrels of oil have been extracted with another 24 billion still potentially left under the North Sea, which means there is still a big potential. Indeed recent gas finds by Centrica in the Pegasus field, just 130 miles out from the Tees Bay, show the potential for local development on the Tees for servicing and terminal activities connected to just this one field.
“There is a glaring need for a new and flexible system of tax help for companies seeking to exploit these assets. The really big operators are now gradually pulling out of the North Sea and many of the companies now involved in exploration and development are relatively small. This is different to the past when the North Sea consisted of a small number of large fields operated by large oil and gas majors who built the infrastructure to extract oil and gas from large fields. Having produced the most accessible oil they move on and are replaced by small and medium independent operators who develop the smaller fields that remain. They will be the local employment base for Teesside offshore workers in the future, but they need help – help the present government is failing to give.”