North Sea oil and gas could lose up to 30,000 jobs due to coronavirus pandemic
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WITH oil and gas prices plummeting amid the coronavirus, a Highlands MSP has added her voice to calls for support to protect jobs in the North Sea sector.
MSP Rhoda Grant reacted after a report by Oil and Gas UK (OGUK) today which has predicted up to 30,000 jobs, mainly in the North Sea supply sector will be cut in the next 12-18 months.
Deirdre Michie, chief executive of OGUK, said oil demand has fallen by almost 30 per cent in a just over two months and the Brent price has collapsed by almost 70 per cent since the start of the year. Alongside this, UK gas prices have fallen to their lowest level for 14 years and are amongst record lows.
She said: "In such challenging times it is critical to recognise that with the right support this industry can still have a strong future.
However, she warned: "The collapse in investment will inevitably impact employment. Job cuts have already been announced and we will see many more in the coming months.
"Our current estimate is that up to 30,000 jobs could be lost over the next 12–18 months, if action to help the sector weather this storm is not successful.
"Our latest Business Outlook report clearly illustrates the severity of the impact on the UK’s oil and gas industry. The outlook is bleak compared to
the picture of steady growth seen only two months ago, before the grip of the pandemic became clear.
"For an industry just emerging from one of the most prolonged downturns in its history, this is especially concerning."
The report proposes a three-stage framework to address immediate needs, spur the recovery and accelerate the transition to a net-zero future.
Added Mrs Michie: "This will require us to work closely with the UK and Scottish governments to make the most of the supply chain capability developed over recent decades.
"With more than half of the world’s population under some form of lockdown, industrial output has plummeted and energy demand has collapsed, and the economic consequences of covid-19 are plain to see.
"It is estimated that the global economy could shrink by eight per cent this year if lockdown continues through the second quarter. The UK economy is likely to reduce by one-third and unemployment levels could rise to as high as one in ten.
"The economic impact of the coronavirus pandemic will likely be a legacy felt for decades."
Operators have reduced staffing levels on rigs to essential personnel offshore to protect the health of the workforce, and have also cut most discretionary activity in support of this and as a result of low commodity prices.
"As a result, new activity in the basin has stalled, investment plans have been postponed and major planned shutdowns delayed. Even after the lockdown eases, low commodity prices are likely to endure, slowing any recovery into 2021 and beyond."
However, Mrs Michie also sounded a positive note: "These may be the most difficult times that any of us have faced, personally, operationally and economically, but our industry has a track record of resilience and working through challenges as they arise and I have no doubt that we will do this again."
In the wake of the stark report, Labour MSP Mrs Grant has backed her North East colleague Lewis MacDonald's work at a national level to secure the salaries in the short-term for hundreds of oil workers throught he UK Government's Job Retention Scheme.
She said: “I am in touch right now with industry leaders. Under the scheme, employers can apply for cash grants online and put employees on furlough, meaning their job is put on hold and they do not work, but they are still employed."
The state then finances 80 per cent of furloughed employees' salaries, up to £2500 per month.
"It is vital that these wages are secured even if only in the short term.”
Mrs Grant said some companies with workers on redundancy risk were clearly of the opinion that they are inhibited from the salary payment scheme because they know they do not have any realistic prospect of having work for their “at risk” employees at the end of the current phase of the lockdown restrictions.
She added: “I am arguing that this is a misreading of the terms of the scheme, and that they should use this Coronavirus Job Retention scheme to delay redundancy. Workers can be furloughed now, then made redundant later, as long as the furlough period is at least three consecutive weeks. It is vital for those families that we get the right outcome on this.”
Mrs Grant said the oil and gas sector is hugely important to the Scottish economy and in 2017/18 contributed £18.4 billion to the Scottish economy.
She said: "The industry is a significant contributor to the economy of the Highlands and Islands creating flexible, high value employment for thousands of people across all parts of the region."
