Nicola Sturgeon hails '˜great success' of oil and gas industry

The oil and gas industry is still a 'great success', First Minister Nicola Sturgeon insisted as she highlighted new figures showing spending by the sector on innovation almost trebled last year.

First Minister and SNP leader Nicola Sturgeon boards a helicopter - dubbed the 'Nicolopter' - in Cumbernauld. Picture: Andrew Milligan/PA Wire

Investment of £15.9 million by Scottish Enterprise - the Scottish Government’s enterprise agency - helped 82 firms working in the sector in 2016-17, allowing them to come up with 111 innovative projects aimed at making their business more competitive.

The projects had a combined value of £43 million - up from £14.5 million the previous year.

The funding also means the Scottish Government exceeded a commitment to provide £10 million to support greater levels of innovation in the North Sea.

Ms Sturgeon highlighted the figures in a speech to the Oil and Gas UK Conference in Aberdeen, telling industry leaders: “This investment by Scottish Enterprise highlights that Scotland is continuing to lead the way in making oil and gas one of this country’s great success stories.”

She added: “Innovation is absolutely crucial to the sector for maximising economic recovery, reducing costs without compromising safety and for enabling our supply chain to continue to win new business overseas.

“Ultimately, it is key to ensuring the sustainability of the North Sea oil and gas industry for the future.

“The leaders of innovation will always be oil and gas companies themselves, however there is an important role for government, working in partnership with business.

“That’s why the Scottish Government has already committed £10 million to support higher levels of innovation activity within the industry to ensure its international competitiveness, alongside an additional £90 million over the next 10 years to develop our oil and gas technology centre and a recently-announced £5 million decommissioning challenge fund.”

She made the comments after Oil and Gas UK chief executive Deirdre Michie said the sector was “moving forward with cautious optimism”.

With oil prices having plummeted, and many firms having been forced to lay off staff, she said the “oil market fundamentals have changed almost beyond recognition in the last 10 years and they are not going to change back any time soon”.

Ms Michie told the conference: “Bold steps have been and are being taken, and we have great examples of companies working differently to improve cost and efficiency, and working hard to lock these benefits in for the long-term.

“We have halved our average unit operating costs over the last two years from around 30 dollars (£23) to 15 dollars (£11) per barrel while safely increasing oil and gas production.

“Reflecting improvements in capital efficiency, the development costs of the projects that have been sanctioned averaged half of those approved in 2013 and are expected to fall further this year.

“We know that some of them (improvements) have been achieved by tough rate reduction, job losses, retendering and, quite frankly, by putting severe pressure on the whole supply chain.

“But we also know that up to two-thirds of these improvements are about efficiency and better ways of working.

“The cynics say that we are a cyclical industry that never learns its lessons.

“Well, this time we have an opportunity to do things differently - especially if we remind ourselves that we have been part of the problem and therefore we all need - including the cynics - to be part of the solution too.”