Lost oil contracts

Published on 28/02/2013 00:00

This week’s annual survey from Oil and Gas UK, the industry trade body, disclosing that North Sea investment this year will be the biggest and most extensive for 30 years (your report, 25 February), is good news for the British economy.

It would be even better news if the government included in its plans provisions to keep that investment in the UK, rather than seeing fabrication contracts go abroad to countries such as South Korea, which was awarded major projects in Statoil’s Mariner and Bressay fields in the North Sea at the end of 2012.

Although investment is at record levels, in the past two years fabrication contracts for North Sea development worth more than £10 billion have been placed overseas. It is estimated more than 10,000 jobs would have been created in this country had those contracts been placed in the UK.

The tax concessions being offered to North Sea oil and gas producers by the government, which are stimulating investment with taxpayers’ money, do not require anything from the recipients. The UK is the only oil and gas province without a positive policy favouring local content. Norway has operated such a policy with great success for 30 years and it has filled its own fabrication capacity.

The government says it cannot intervene, with EU regulations being blamed as the barrier to supporting UK manufacturers. Now, as the Oil and Gas UK activity survey predicts £100bn of economic stimulus, surely the government will require a significant percentage of the fabrication contracts to be placed in Britain.

Dennis Clark

OGN Group

Wallsend, Tyne & Wear