CUTS to the North Sea oil and gas industry will compromise safety and increase the risk of another Piper Alpha-style disaster, trade unions have claimed.
The warning was issued ahead of tomorrow’s crisis summit in Aberdeen, which will see leading industry figures say that the sector is at “great risk” from the falling oil price unless the UK government acts urgently to cut tax.
Politicians including the Scottish Secretary Alistair Carmichael and Scotland’s First Minister Nicola Sturgeon will attend the summit.
The meeting has been organised amid deep concern about job losses in the sector caused by a dramatic fall in the price of oil to below $50 per barrel. Shell revealed 250 job cuts in Britain’s oil capital at the start of August, while BP has since axed 300 jobs. Chevron of the US and Statoil of Norway have also cut their staff in the UK.
Yesterday the UK’s biggest union Unite said oil companies were set to reduce spending on investment and exploration by $170 billion – a 37 per cent cut – by 2017.
It believes that falling investment would lead to shortcuts being taken on safety unless the government stepped in to support the sector.
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Unite’s regional officer John Taylor, a speaker at the summit, said: “The rush by firms to cut jobs and reduce costs is placing enormous pressure on the remaining workforce, and is harming the industry’s reputation.
“Unless something is done soon to stem the flow of job losses, key skills will be lost. Our worst fear is that these cuts could create the potential for another health and safety disaster on the scale of Piper Alpha.
“We are seeing already that the shift to working three weeks on followed by three weeks off in an intensely harsh and demanding environment is taking its toll on workers.”
The explosion on the Piper Alpha rig in 1988 killed 167 workers.
Unite believes that more money should have been set aside in more profitable times to deal with safety issues.
Taylor said: “The sector is facing a crisis following the dramatic fall in oil prices and a downturn in demand. These workers now need action, not blame-apportioning.
“We are losing vital, world-class skills, so we are urging the national government to do as they have done for previous important sectors and provide financial assistance.”
Speaking ahead of tomorrow’s event, which is being hosted by Aberdeen City Council, Oil and Gas UK chief executive Malcolm Webb warned that a harmful business environment had put the industry at great risk.
He said: “Britain’s great oil and gas industry has over the last four decades overcome challenging geology and volatile commodity prices to provide hundreds of thousands of highly skilled jobs, generate hundreds of billions of pounds in tax revenues and foster innovation. However, the inconsistent and unpredictable government policy it has faced, now combined with sharply rising costs and a sudden drop in oil price, has dealt a blow which is doing real and potentially long-lasting damage.”
Sturgeon said: “It is vital that for the industry to succeed in the decades ahead we need fiscal and regulatory change in the oil and gas sector. In the short term, that means urgent action on taxation.”
A government spokesman said: “The UK government has used its size and strength to stand squarely behind this vital industry and will continue to do so. The Secretary of State will underline that clear message to the sector at Monday’s event.”