A north-east MP has penned a concerned letter to the Oil and Gas Authority (OGA) claiming small and medium oil contractors are being “undermined” through delayed payments.
Minister for Gordon Colin Clark has written to the chief executive of the OGA Andy Samuel claiming that many SMEs are being shortchanged by large North Sea firms, with some having to wait up to 100 days for debts to be settled.
Mr Clark also claims the situation has “deteriorated” over the past two years.
Payments for goods and services are usually made within 60 days, or 30 days for public bodies.
The OGA refused to comment on the letter.
He said: “Many firms have complained about the impact of larger companies failing to pay up in good time.
“There has been a deterioration in payment terms – even during the last two years – and it is threatening the viability of smaller companies.
“In the oil and gas industry, it is the smaller firms in the supply chain that are being squeezed by larger operators.
“It reflects badly on the top tier companies – which are the firms that have benefited the most from government fiscal support.”
Mr Clark confirmed that he has also raised the issue with the UK Treasury and the Department for Business, Energy and Industrial Strategy (BEIS).
In his follow-up letter to the OGA, he said the issue was a “poor reflection” on big oil and gas firm’s “who are given the most fiscal support” while delayed payments are threatening the “viability” of smaller firms.
He added: “I think a balance needs to be found, to ensure smaller firms are treated fairly.
“Having been in business myself for over 25 years, I do not want to see legislation. However, big multinationals must sort out their payment policy or risk government intervention.”