The UK government unveiled Thursday a new oil and gas strategy aimed at securing billions of pounds of future investment and thousands of jobs in the sector.
The government said that it has pledged to maintain the fiscal regime it has put in place to encourage investment and innovation. This will include guarantees on tax relief for decommissioning activities as announced in the recent UK Budget.
Plans include specific measures to address the skills gaps in the UK oil and gas sector. The government plans to help the industry find the additional 15,000 staff it will need over the next five years by establishing a national program to retrain ex-military personnel so they can be redeployed in the oil and gas industry. As part of this plan, $10.6 million (GBP 7 million) has been awarded to Newcastle University to establish a training establishment called the Neptune Centre that will carry out subsea and offshore engineering programs.
The government will also put measures in place to boost supply chains. The aim is to develop the oil and gas supply chain so that the sector's suppliers can build further on the $40.8 billion (GBP 27 billion) of revenues that they already generate in the UK. The government said that fabrication has been identified as one particular subsector that will be targeted to ensure the UK remains competitive in both domestic and international markets.
In addition, provision will be made for specialist support from government body UK Trade and Investment to look at how the UK supply chain can increase exports, building on the increased funding of $211 million (GBP 140 million) announced in the Treasury's Autumn Statement to help small and medium-sized businesses export abroad and exploit high-value opportunities in markets such as Brazil, Mexico, Saudi Arabia and Australia.
Ahead of the strategy launch Thursday, UK Business Secretary Vince Cable commented in a statement:
"The oil and gas industrial strategy is the start of a real plan of action owned by industry and government. It is a strategy that all sides are committed to, so that future decades of investment and growth can be maintained in the North Sea.
"An important part of this strategy is how we can develop the UK supply chain. I want us to consider what barriers are stopping British companies bidding for and winning work in the North Sea.
"This is an expanding industry. We can either help create more jobs and opportunities across the UK if we get this right. Or see work going overseas if not."
UK Energy Secretary Ed Davey added:
"The UK’s oil and gas industry is a vital strategic resource that helps fulfill our energy needs and insulates us from volatile global markets. By partnering with industry to support oil and gas investment offshore and onshore, the Coalition government aims to boost growth and enhance the UK’s energy security."
Meanwhile, trade body Oil & Gas UK welcomed the new strategy, describing it as "one more step in the right direction". Oil & Gas UK Chief Executive Malcolm Webb released a statement in which he said:
"Close engagement with the UK government and the resulting tax changes introduced last year to promote investment in the oil and gas sector are now bearing fruit. Record investment is forecast this year to search for and produce UK oil and gas reserves. This will be followed by an upturn in production from 2014, sustaining growth across the supply chain and reinforcing the industry's already significant contribution to the UK economy.
"The launch of the government’s strategy for the sector is one more step in the right direction and brings deserved recognition to the capabilities of our world class supply chain."
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