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Oil and Gas Fields

Volume 497: debated on Wednesday 14 October 2009

2. What recent discussions he has had with the Secretary of State for Energy and Climate Change on the effects of investment in offshore oil and gas fields on levels of employment in Scotland. (292279)

I have regular discussions with the Secretary of State for Energy and Climate Change about the North sea oil and gas industry.

I hope that, during those discussions, the Secretary of State will begin to realise how important it is for the Government to get their strategy right now, given the thousands of jobs that depend on the North sea oil and gas industry. The pipelines and platforms are ageing. If they do not benefit from new investment soon they will be decommissioned, and we will miss out on the thousands of jobs still to come. Will the Secretary of State emphasise to the Treasury that while the car industry and the banks receive rescue packages, it is vital for the right tax regime to be established for the North sea to encourage the maximum investment to protect those future jobs and our security of supply?

The hon. Gentleman makes an important point. The new field allowance announced in the Budget was welcomed by the chief executive of Oil and Gas UK. Those Budget measures will help to unlock about 2 billion barrels of oil in the North sea. There are, of course, additional opportunities, particularly in and around the area west of Shetland, which constitutes a remarkable untapped resource in particularly inhospitable terrain. We always keep the fiscal regime in mind, and continue to keep fiscal measures under review.

Given all the emphasis on climate change, it is not surprising that renewable energy receives a great deal of publicity, but will my right hon. Friend ensure that we do not forget about the oil and gas industry offshore, which will be needed in the short to medium term—if not, indeed, the long term—to fill the energy gap that would otherwise exist? It is important not just to the economy of north-east Scotland but to that of the whole United Kingdom, because there are jobs in the industry throughout the UK.

My hon. Friend raises the importance of the North sea oil and gas industry with me probably every week. About 20 billion barrel-of-oil equivalents are still untapped in the North sea, and we will do what we can to help the industry to exploit that resource. The fact is, however, that while oil and gas will be with us for the foreseeable future, we will have to make the transition to renewable energy. Oil and gas are a temporary source of energy, and Scotland’s energy and economic needs are permanent. That is why we must get the balance right between fossil fuel and renewables, and we will continue to do so.

Does the Secretary of State agree that one of the major opportunities for companies that are currently engaged sub-sea in oil and gas is to work sub-sea on tidal and offshore wind? Does he share my disappointment that the Crown Estate has yet again delayed its announcement of licences to February, and what can he do to encourage it to be more expeditious?

I had the privilege of being in the hon. Gentleman’s constituency during the summer recess, and he made those very points then. On the same day I visited an offshore wind turbine in the Beatrice field in the North sea, which represents a remarkable feat of modern manufacturing and ingenuity.

It may be helpful if I confirm to the hon. Gentleman again that I am happy to facilitate meetings with him and the Crown Estate to discuss the issue, so that we can unblock it once and for all.

Can my right hon. Friend give any idea of the stage that the new licensing has reached? At one time there was drilling in the Clyde estuary. Is there any update on that? It would bring a number of jobs to the Ayrshire area. Will my right hon. Friend take the opportunity of congratulating all agencies in Ayrshire—

I am not able to update my hon. Friend today on the number of licences, although the Department of Energy and Climate Change has engaged in a rigorous process in that regard. However, my hon. Friend is absolutely right: this is a jobs boon not just for the North sea, Aberdeen and surrounding areas, but for the whole of Scotland. Almost 200,000 jobs in Scotland rely on related industries in oil and gas.