You are here
UK announces help for struggling North Sea oil industry
[LONDON] Britain announced on Thursday a £250 million (S$513 million) package of funding to boost the oil industry in northeast Scotland, which has been hit hard by slumping prices.
Prime Minister David Cameron visited the oil city of Aberdeen and met industry bosses for talks on the current situation.
"Obviously it's a difficult time for the oil industry because of the oil price decline, but what this shows is that the British government is 100 per cent behind this industry, behind Aberdeen, behind Scotland," Mr Cameron said.
"We want to see this port expand, we want to see an energy innovation centre, we want to help Aberdeen to diversify its industrial base," he said.
Scotland's First Minister Nicola Sturgeon welcomed the announcement and said that the Scottish government would add £254 million in funding to improve infrastructure in the region over the next five to ten years.
Global oil prices fell by more than 30 per cent in 2015 and have dropped by another 20 per cent this year amid increasing production and weaker demand.
In London, Brent North Sea crude for March, the European benchmark for crude oil, is currently at US$34.24 a barrel, down from highs of over US$100 in 2014.
"We very much welcome Prime Minister David Cameron's visit to Aberdeen and his recognition of the seriousness of our situation," said Deirdre Michie, head of Oil and Gas UK, an industry body.
"While the oil and gas sector is under severe pressure globally, due to the current oil glut and price collapse, it is being felt particularly forcefully on the UK Continental Shelf (UKCS), which is a mature basin with its own particular difficulties and cost challenges," she said.
"Companies are doing all they can to bring down costs and be more efficient, but many are still having to make difficult decisions," she added.
The funding is expected to be used to help the oil and gas industry export its expertise globally as well as encouraging economic diversification in northeast Scotland.
It has been committed equally by the government in London and the devolved Scottish administration based in Edinburgh and led by the pro-independence Scottish National Party (SNP).
Oil and gas production in Britain rose by over seven percent last year, the first increase in over 15 years, Oil & Gas UK said this month.
The Oil and Gas Authority (OGA) earlier estimated that the sector has lost 65,000 jobs - 15 per cent of its workforce - since the start of 2014.