Last Thursday I hosted a meeting of the leading players in oil and gas – who came together to review the steps agreed at last year’s event, and consider any new actions which will sustain and anchor our oil and gas economy to Aberdeen.
The summit was a small, round table discussion involving all the key stakeholders. This important gathering gave me the opportunity to check in with Oil & Gas UK and the Oil and Gas Authority. I also heard from the trade unions to see what their needs are and spoke to those involved in the Scottish Government’s Energy Jobs Task Force. Collaboration was a key theme from last year’s summit and I am keen to see that continue with the support of colleagues in Aberdeenshire, the two governments and the private sector led economic development company Opportunity North East (ONE). We were fortunate to have Sir Ian Wood among us, one of the world’s leading industry experts, who chairs ONE and the board of the planned Oil & Gas Technology Centre.
Clearly, there is a lot of doom and gloom around the state of the sector, but rest assured, there is still plenty of life in the North Sea yet. We are now working against the backdrop of the £250 million City Region Deal – a partnership between the City, Aberdeenshire and ONE – which could leverage in an estimated further £550m of investment. That’s an £800m resource we didn’t have when we last met in 2015.
The firms working in oil and gas know that they need to be thinking and planning for the long-term – the oil price may be low now but there have been many fluctuations in the past and it will recover in time.
There are billions of barrels of oil waiting to be extracted from the North Sea in the future.
We know, for example, that small firms are helping to drive some expansion and investment. And more companies are starting to show an interest in renewables.
The new £180 million Oil and Gas Technology Centre (OGTC) will support Maximising Economic Recovery in the North Sea and help transition Aberdeen from simply an operational base to a major, international centre for offshore technology and innovation.
This will also anchor the supply chain here for the long term.
The expertise which resides in the North-east is in demand all over the world, which means we can take our innovation and advanced technology and export it to basins abroad.
In the short term, though, the sector needs support and in some cases, needs to work differently. Small firms may be expanding in some areas, but bigger firms could catch up by working much more closely together.
The interest that some mid-sized firms are showing in renewables could also be boosted by more investment from the Scottish Government.
The Government in Whitehall should also provide a sympathetic ear to the case made by Oil & Gas UK and others for significant cuts to taxes on the sector.
Tax breaks have already helped make development possible, but for the sake of the high-quality jobs in Aberdeen, and the wider regional economy, the UK Government will have to go much further.
The region has survived previous slumps, but we must future-proof the local economy to ensure that rising and falling oil prices do not mean that the entire North-east economy rises or falls by its side. A crucial part of our recovery strategy is diversification and that will take many different forms. From energy to exploration, which has been a key staple, to subsea and new technology. We must look at how we apply these to the wider energy industry such as renewables and hydrogen but also how these new technologies could benefit other sectors.
We have a significant food, drink and agricultural base in the region and are planning a major step-change in our tourism sector.
Significant investment is needed, of course, but it must be evenly distributed, benefitting not just the oil industry and the creation of new jobs, but also encouraging a wider base of skills.
It must include investment in food production and life sciences, not to mention improvement of transport and educational outcomes for the next generation of North-east workers
Aberdeen is a city of 227,000 people and with a vibrant education sector that includes two universities and a higher education college. This means that at any given time there are almost 60,000 young people studying here. We must retain the brightest minds and ensure they play a leading role in shaping our brave, new economic world.
We also want to encourage students and graduates to be entrepreneurial and join the fast-expanding start-up scene in the region.
We are keenly aware that Aberdeen needs an effective infrastructure for a more sustainable future that’s not wholly dependent on oil.
The proposed multi-million pound extension of Aberdeen Harbour is a giant step forward for the city and will support economic regeneration too.
Notwithstanding the challenges we currently face, the outlook for the future is very encouraging and we are taking the right steps today to create a better tomorrow.