An oil and gas strategy to secure billions of pounds of future investment and thousands of jobs is expected to be unveiled by the UK Government today.
Tax certainty, supply chain support, and bridging skill gaps are all areas of focus for the Government’s new oil and gas strategy.
Developed in partnership with industry, the Government hopes the strategy will offer 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.
Ahead of the strategy launch, Business Secretary Vince Cable said he wanted the Government and business to consider what barriers are stopping British companies bidding for and winning work in the North Sea and rectify those issues.
“This is an expanding industry,” said Dr Cable. “We can either help create more jobs and opportunities across the UK if we get this right. Or see work going overseas if not.”
As a part of the strategy launch, Vince Cable will also visit Shell and Global Energy, a specialist manufacturer of bespoke energy equipment. The Business Secretary will learn more about Shell’s recent major acquisitions in the North Sea Oil as well as the role that Shell and Global Energy can play in helping the UK supply chain to compete more effectively with suppliers elsewhere in the world.
Rhian Kelly, CBI Director of Business Environment, commented that the strategy will give the sector long-term certainty to reach its full potential.
“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,” said Ms Kelly.
The action points and programmes which form the strategy and which are 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.
- Encouraging more technological advancement through research and development, which will enable industry to better understand complex reservoirs, reduce drilling costs, improve efficiency and enhance production.
- Raising the profile of Britain’s growing oil and gas sector, to foster innovation and attract the best talent, including the imminent launch of an Oil & Gas UK campaign to raise awareness among the general public.
- Developing work between the financial services’ sector and industry to address challenges of access to finance. The government’s ‘business bank’ will help small and mid-sized businesses access finance including by communicating existing schemes.