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UK Gov to invest £250 million in Aberdeen oil and gas

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Hydrocarbon Engineering,

A major new injection of cash into North East Scotland’s economy has been confirmed with the signing of a new UK City Deal fund of up to £250m. The agreement will be Scotland’s second UK City Deal, following Glasgow’s arrangement agreed in 2014, and will again see equal funding committed by the UK and Scottish Governments.

The City Deal will address a number of proposals from the region including a new energy innovation centre, supporting the industry to exploit remaining North Sea reserves, as well towards the expansion of Aberdeen harbour, enabling the city to compete for decommissioning work. Scottish Secretary David Mundell will sign the deal on behalf of the UK Government. Then later, the Prime Minister David Cameron will visit Aberdeen to meet local employers and workers, as well as senior executives from the oil and gas industry, to hear about the challenges facing the area.

The UK’s oil and gas industry is its largest industrial sector, contributing around £19bn in gross value added in 2014. As of 2014, the industry was estimated to support around 375 000 jobs across the economy. Oil and gas are expected to continue to provide around 70% of the UK’s total primary energy from now until 2035.

Whilst in Aberdeen, the Prime Minister is also due to announce further UK Government measures to safeguard oil and gas sector jobs, on top of the financial boost the UK City Deal will bring.

Secretary of State for Scotland, David Mundell, said, “Oil and gas is a crucial sector, not just for the North East of Scotland but for the whole of the UK. I know it’s a very tough time for people who work in the industry and their families, and I am determined that the UK Government will do what it can to support them.” He continued, “We need action which will help in the short, medium and long terms – building a bridge to the future of the North Sea; helping the UK’s oil and gas industry to export its world-class expertise around the globe; and encouraging diversification of the economy to create new opportunities in other sectors too.”

The announcements add to the wider support the UK Government is providing for the North Sea and those whose livelihoods rely upon it. In the last Budget, the Chancellor George Osborne announced a £1.3bn package of reforms for the UK Continental Shelf, including tax cuts for the industry and a £20m funding boost for seismic surveying to boost offshore exploration.

A new Ministerial group on oil and gas, chaired by Energy and Climate Change Secretary Amber Rudd, has also been set up to reiterate the UK Government’s commitment to supporting the oil and gas industry and those who work in it. The group will coordinate the UK’s response to the oil price and focus on vital issues such as exports, skills and investment.

On 27th January 2016, the group met for the first time, and agreed to produce a UK oil and gas workforce plan in the spring. This will focus on what steps the Government will take to support those who may lose their jobs in the oil and gas sector, and set out how Government and industry can help these skilled workers move into other sectors, including other energy related infrastructure projects.

Amber Rudd said, "We’re stepping up our response, and yesterday I chaired a very productive meeting of the new Ministerial group on oil and gas. As well as looking at how we help the industry get more business internationally and draw more investment into the UK, its very first priority will be to set out what steps the UK Government will take to support those who may lose their jobs in the oil and gas sector. The plan will focus on how Government and industry can help these skilled workers move into other sectors and find opportunities where their skills can be best put to use, including other energy related infrastructure projects”.

As well as supporting the industry in its current form, the UK Government is working hard to help develop new markets for the world leading expertise, which exists in North East Scotland and elsewhere in the UK. As part of this, David Mundell will visit Mozambique in February 2016 to support the drive to strike a formal agreement between Aberdeen and the town of Pemba. The aim is for a deal which will see technology designed and manufactured in Aberdeen, and the skills of its workforce, play a key role in developing Pemba into an oil and gas hub.

Adapted from press release by Francesca Brindle

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