Job losses spark call for Government action on offshore industry

Stockton firm becomes the latest to shed jobs, but so far only the Scottish Government has acted

Andy Buchanan/PA Wire An oil rig in the North Sea
An oil rig in the North Sea

Calls are growing for the Government to act on the crisis in the offshore industry after a fourth North East firm shed jobs in response to the crash in oil prices.

Oil drilling services firm MHWirth has announced the closure of its Stockton base, threatening the future of around 18 jobs.

In the face of an abrupt decline in drilling jobs caused by recent falls in oil price, the firm will close its Preston Farm Industrial Estate operation just three years after it talked of employing 200 staff at the site.

The move is part of a global plan to shed up to 750 jobs from MHWirth, and follows similar moves by several other North East oil and gas supply chain operators hit by shrinking investment by large oil firms.

In December oil field services firm Archer abruptly closed its Blyth office, while subsea umbilicals specialists Flexlife confirmed their Newcastle operation was under review.

International reorganisation at subsea engineering firm DeepOcean is expected to spell job losses in Darlington, and earlier this month the Norwegian parent company of Stockton’s Reef Subsea UK filed for bankruptcy, calling into question the future of the North East operation.

Danny Lawson/PA Wire First Minister Nicola Sturgeon talks to Technical Specialist Euan Gibbons during a visit to pipeline support service provider, Pipelines 2 Data in Aberdeen, Scotland
First Minister Nicola Sturgeon talks to Technical Specialist Euan Gibbons during a visit to pipeline support service provider, Pipelines 2 Data in Aberdeen, Scotland

In light of the market turmoil, Scottish First Minister Nicola Sturgeon has established an “Energy Jobs Taskforce” to shore up Scotland’s oil and gas supply chain.

The body will guarantee Scottish Modern Apprentices (MAs) faced with redundancy the offer of alternative employment or continued off-the-job training before alternative employment.

Senior executives from the likes of BP, Taqa, Petrofac and the Wood Group joined the inaugural meeting of the taskforce late last month.

So far the UK Government has not acted on calls to help the industry, but Mrs Sturgeon yesterday increased the pressure on Ministers at Westminster to act.

George Rafferty, chief executive of NOF Energy, welcomed the creation of the Scottish taskforce, which he said would help the North East.

He said: “One of the toughest challenges facing a cyclical industry like oil and gas is maintaining the workforce and, in particular, continuing to support the development of future skilled personnel through apprenticeships. Any support that can be provided by Government to secure jobs and provide a platform for future investment has to be welcomed and the principles of the Energy Jobs Taskforce demonstrate the willingness of politicians to assist the industry.

George Rafferty, Chief Executive of NOF Energy, the business development organisation for oil, gas, nuclear and offshore renewables sectors
George Rafferty, Chief Executive of NOF Energy, the business development organisation for oil, gas, nuclear and offshore renewables sectors

“Ensuring apprentices complete their training is essential if oil and gas sector, like all industries, is to avoid potential skills gaps. Providing a guarantee that apprentices are offered alternative employment if they face redundancy is a positive move towards safeguarding the sector’s next generation.”

Yesterday Mrs Sturgeon said UK Government could no longer ignore calls for urgent tax changes that could yield a “resurgence” in the North Sea oil industry.

Ms Sturgeon said “urgent fiscal stimulus” was needed to increase exploration work as UK Government ministers have hinted that measures to help the North Sea could be included in the Chancellor’s Budget next month.

Ms Sturgeon said: “Quite frankly, the UK Government has failed to address the exploration problem in the North Sea.”

She added: “Fiscal measures to incentivise exploration, coupled with the appropriate regulatory expertise, have the potential to drive forward a resurgence in exploration in the North Sea.

“We only have to look at the situation in Norway in 2005 to see that simple steps can be taken to restore a decline in exploration. In the course of three years, the introduction of the exploration tax credit saw the number of exploration wells increase an incredible fourfold.

“We have also called for the reduction in the headline rate of tax in the North Sea and the introduction of an investment allowance, all of which have the potential to provide an important signal to investors, increase the attractiveness of North Sea exploration projects and enhance the competitiveness of the sector.”

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