Oil and gas strategy launched to promote billions worth of new investment
An oil and gas strategy to secure billions of pounds of future investment and thousands of jobs has been unveiled by the UK Government. It pledges to maintain fiscal regime that encourages investment and innovation, encourage measures to boost supply chains and tackle engineering skills gap and earmark £7 million for a new research facility.
The Oil and Gas Industrial Strategy: Business and Government Action Plan has been published to secure billions of pounds of future investment and thousands of jobs. The Government comments that tax certainty, supply chain support, and bridging skill gaps will provide continued growth. Developed in partnership with industry, the strategy is aimed at offering investment confidence and security by setting out a clear path to exploit the UK’s remaining resources and overcome an increasingly challenging production environment.
This follows the recent launch of the aerospace and nuclear strategies and is the next step in the Government’s industrial strategy. Strategies for eleven key sectors will be completed in partnership with business in the coming months to secure sustainable future growth in the economy.
UK oil and gas production is vital for energy security and to the economy, employing over 400,000 people. The action points and programmes already underway include:
- · Maintaining a fiscal regime that encourages investment and innovation in the UK Continental Shelf. This includes guarantees on tax relief for decommissioning as announced by the Treasury in last week’s budget.
- · Developing the UK supply chain further so that UK supply chain firms can build on the £27 billion of revenues which they already generate in the UK. Fabrication has been identified as one area to target to ensure the UK remains competitive in domestic and international markets.
- · Provision of specialist support from UK Trade and Investment (UKTI) to look at how the UK supply chain can increase exports in the sector, building on the increased funding of £140 million announced in the Autumn Statement to help small and medium enterprises (SMEs) export abroad. This is to capitalise on high value opportunities in markets such as Brazil, Mexico, Saudi Arabia and Australia.
- · Filling the skills gap, which is seen as one of the biggest challenges facing the oil and gas industry, especially for SMEs. Work is underway to develop and match the skills needed within the industry and see how future or existing programmes can help.
Addressing the skills shortage of mid-level career engineers, the industry expects it will require an additional 15,000 staff over the next 4-5 years across a range of disciplines. Government and industry will look at establishing a national programme to retrain ex-military personnel to enable them to be redeployed in the oil and gas industry. Ex-military personnel often have the skills the industry looks for and have successfully transitioned into the sector.
As part of this, £7 million has been given to Newcastle University through the Higher Education Funding Council for England (HEFCE) to establish the Neptune National Centre for Subsea and Offshore Engineering. The Neptune research and development centre will act as a place for industry and academia to interact, providing crucial infrastructure for emerging research opportunities.
Rhian Kelly, CBI director of business environment, said: “Oil and gas will continue to play a key role as part of a balanced energy mix over the coming decades. It remains a champion sector for the UK, underpinning growth and creating thousands of jobs over the last 40 years, but it cannot rest on its laurels. This strategy will give the sector long-term certainty to reach its full potential.
She continued: “The UK must keep pace with a rapidly changing and competitive industry – with robust skills training; better access to finance; new offshore engineering research; and a fiscal regime that rewards investment and innovation. A stronger, better equipped supply chain will mean that firms can win new business at home and abroad. We now need strong leadership from the new Oil & Gas Council to deliver this ambitious agenda, with buy-in from across the whole of Government.”
Photo caption: Rhian Kelly: “Oil and gas … remains a champion sector for the UK, underpinning growth and creating thousands of jobs over the last 40 years…”
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