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Oil and Gas Industry (Government Support)

– in the Scottish Parliament on 9th June 2016.

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Photo of Murdo Fraser Murdo Fraser Conservative

5. To ask the First Minister, in light of the findings of the latest Bank of Scotland research series report on oil and gas, what support the Scottish Government will offer the industry. (S5F-00040)

Photo of Nicola Sturgeon Nicola Sturgeon Scottish National Party

The oil price has increased since that survey was conducted, but the report undoubtedly highlights the challenges that the industry and its workforce face. Keith Brown and Paul Wheelhouse visited Aberdeen last week, where they reiterated our commitment to securing a long-term future for the sector. We continue to provide practical support to the workforce and industry through, for example, the transition training fund, the energy jobs task force and our enterprise agencies.

The United Kingdom Government retains control of the key taxation levers that affect the sector. A clear conclusion from the report is that more action must be taken on that front, with around half of all companies wanting to see a basin-wide fiscal stimulus for exploration. We continue to press the UK Government to support exploration and to deliver on its commitment to consider loan guarantees for offshore infrastructure.

Photo of Murdo Fraser Murdo Fraser Conservative

I remind members that there is a briefing in committee room 2 immediately after First Minister’s question time from Bank of Scotland on the report.

One helpful thing that the report tells us is that a majority of large companies see the opportunity to diversify into shale gas. Sadly, the opportunities—and the jobs that will be created—will be located outside Scotland due to the Government’s moratorium on fracking. The First Minister says that we need to listen to the science on the issue, but she should know what the science is already, because her Government commissioned a report on unconventional oil and gas from an independent expert scientific panel. The report, which was published nearly two years ago in July 2014, concludes:

“The technology exists to allow the safe extraction of such reserves, subject to robust regulation being in place”.

Why is the First Minister not listening to her Government’s own scientists on the matter? Why is she holding back the vital oil and gas industry?

The First Minister:

That is complete nonsense. The moratorium on fracking has been introduced so that we can carefully study all the different aspects before coming to a decision that is guided by and based on evidence, and also takes into account public opinion—the opinion of members of the public who would have to live in areas affected by such technology. That is absolutely the right thing to do.

Interestingly, when it comes to diversification, Murdo Fraser did not quote the report fully, because the companies that talked about the opportunities of diversification also talked about the opportunities of diversification into renewables. I wonder why a Tory member of the Scottish Parliament did not want to mention renewables. It is because—against all the evidence, against the wishes of people the length and breadth of this country, and against some of the investment decisions of our companies—the Tory UK Government is currently destroying our renewables potential by the wrong-headed decisions that it is taking. Perhaps Murdo Fraser would be better advised to get on the phone to his colleagues in the UK Government and ask for support for renewables before he comes to this chamber to talk about fracking.

Photo of Jackie Baillie Jackie Baillie Labour

On 21 January, the First Minister was asked when she would provide an updated “Oil and Gas Analytical Bulletin”. She did not answer then, but I am persistent, so I am giving her a second opportunity.

Given the severe challenges facing the oil and gas industry, outlined starkly in the Aberdeen and Grampian Chamber of Commerce survey in May, will the First Minister now publish a revised oil and gas bulletin? When will we see it?

The First Minister:

A revised oil and gas bulletin will be published in due course, and I will make sure that Jackie Baillie is one of the first to know when it is due out.

However, I say to Jackie Baillie in all seriousness that, although it is important that we publish such publications routinely—we will continue to do so—we do not need a revised oil and gas bulletin to tell us about the challenges that the sector faces right now. We know about those from our discussions and engagements with the industry and from reports such as the one that we are talking about today.

Yes, we will publish the revised bulletin in due course but, in the meantime, we will continue to get on with the job of supporting the industry, providing practical support on the ground and calling on the UK Government to do the right thing as well.

Photo of Tavish Scott Tavish Scott Liberal Democrat

The First Minister will be aware that the decommissioning industry could be very important to Scotland and the UK in the coming decades. When she meets Amber Rudd, the Secretary of State for Energy and Climate Change, tonight—although for different reasons—will she make the point that tax relief should be used to ensure that the jobs in that industry are retained here, in Scotland, rather than taken overseas to Norway or other European countries?

The First Minister:

Yes, I can give the commitment that we will make that case—I will do my best to do so tonight—on an on-going basis, because the matter is important. Although we do not want to see premature decommissioning in the North Sea, decommissioning nevertheless is a massive economic opportunity for us and we want to make sure that the benefit of that opportunity is enjoyed here in Scotland and not elsewhere. Part of what we need to do to secure that is, of course, what Tavish Scott says—to make sure that the tax incentives and the tax environment in place are the right ones. We will continue to argue that case very strongly.