“Double-edged crisis could lead to catastrophic job loss”
The British oil industry is sounding the alarm warning that the oil price war and Covid-19 could drive the North Sea oil and gas industry over the cliff edge, putting tens of thousands of offshore workers out of work.
“We are extremely concerned at the potential of the current double-edged crisis to permanently damage members’ jobs and conditions, as well as production capacity in the North Sea”, says general secretary Mick Cash of the British offshore energy union RMT.
The union is already hearing that exploration projects on the UK continental shelf are being delayed or cancelled as oil and gas prices plummet to unsustainable levels. “This is threatening to take some operators to the wall, along with the contractor and supply chain workers maintaining their assets”, Cash says.
The union warns that this will not only affect companies and their workers but will increase the UK’s reliance on imported fossil fuels as well.
30% less investment
Industry association Oil and Gas UK (OGUK) expects drilling levels to fall back to the lows experienced in 2016, down more than a third on previous forecasts. Capital investment for 2020 could drop as much as 20 to 30 percent and many operators face negative cash flow this year, the association states.
“Businesses and industries across the UK are facing extraordinary pressures but coming so soon after one of the worst downturns in our history, the sector is now in a paper-thin position”, says OGUK CEO Deirdre Michie.
Both organizations urge the government to create a new strategy and take action to prevent the industry from a crisis worse than in 2016.
Cash points to Norwegian state energy company Equinor as an example, which has set up a Covid-19 crisis department with the aim to preserve oil and gas production and the jobs it supports in the North Sea today.
“The UK and Norway are subject to the same economic conditions and the UK Government must agree a new offshore oil and gas industrial strategy with the offshore unions and industry in order to prevent catastrophic job losses”, Cash says. Norwegian analyst firm Rystad Energy estimates that more than 200 small- and mid-sized British and Norwegian oilfield service providers could go bankrupt as a result of this crisis.