Oil and gas sector deal 'unlikely' after ministers reject report

A sector deal for the oil and gas industry is now “unlikely” after ministers rebuffed the recommendations of an influential Commons committee, it has been claimed.

The Scottish Affairs Committee (SAC) had advised a deal was “vital” to protect the north-east’s status as a global energy powerhouse, but the UK Government yesterday rejected this, saying the relationship with the sector was already “well-established”.

An oil and gas sector deal bid — submitted last year by a group of industry bodies — predicted a total spend of £176 million “had the potential” to deliver £110 billion for the UK economy between now and 2035, with Scotland being a main beneficiary.

But the Department for Business, Energy and Industrial Strategy said the industry had “already received unprecedented support” and a number of projects are “already being taken forward without a formal sector deal”.

The department added: “Industry has pragmatically suggested this will be in a phased approach rather than necessarily as a formal deal.

“Government ministers and officials at all levels engage closely on a range of issues related to our modern industrial strategy and on the oil and gas sector, including through the MER UK Forum chaired by the OGA and look forward to continuing this engagement.”

SNP MP Pete Wishart, who chairs the SAC, said: “Though there are some positive noises from the government, such as their enhanced funding for carbon capture and storage technologies and the recently announced centre of underwater engineering, we are disappointed by its reluctance to give a clear answer about whether it will implement an over-arching sector deal that would truly transform the oil and gas industry in Scotland.

“A sector deal would provide the co-ordinated approach needed to support transition to a new clean energy industry.

“The last thing the industry needs now is continuing uncertainty, so I have written to the minister to press for more clarification on the government’s stance on a sector deal.”

The SAC praised the government for its acknowledgement that “decommissioning presents a global economic opportunity for Scotland’s industry”, but wants details.

Mr Wishart said: “Though the oil and gas industry will have a challenging future, these new circumstances could bring significant opportunities and help the government meet the UK’s climate change targets.”

But he said the government must act now to capitalise upon the potential of decommissioning and cleaner energies.

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