UK Oil and Gas Industry — [Mr Virendra Sharma in the Chair]

Part of Backbench Business – in Westminster Hall at 2:12 pm on 19 April 2018.

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Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Economy), SNP Deputy Leader, Shadow SNP Spokesperson (Economy) 2:12, 19 April 2018

I do not believe in having fracking onshore in Scotland, and I am sure the hon. Gentleman would not expect that. The benefits of fracking are not as big as they are made out to be. Were it to be allowed, it would bring very little in the way of jobs or tax take, and the loss to our communities and the upheaval caused in them would be so significant that it would not balance out those jobs and tax take.

I am incredibly pleased to hear the Minister talk so positively about carbon capture and storage. What happened previously in relation to that was a train wreck—it was horrendous. It was awful how the rug was pulled from under it; I could not be clearer in my condemnation. I recognise that it was not the Minister’s responsibility at the time and I do not blame her in any way for that. I am pleased that she is being so positive.

We need to ensure that, whatever we do on decommissioning decisions and changes to allowances made by the OGA, we do not prejudice future carbon capture and storage opportunities. For example, we should not prematurely decommission a pipeline that could be useful for carbon capture and storage. As we do not yet have a full grasp of what carbon capture and storage technology will look like, it is very difficult for such decisions to be made. However, I ask that whatever is looked at is considered carefully in those terms and that carbon capture and storage is considered when any decommissioning decision is made. Any decision on any of that needs to be made very carefully.

I am also of the opinion that decommissioning, if done right, can bring some jobs and some revenue. However, I do not think it will be the biggest windfall in the entire world. I appreciate the action that the UK Government have taken on decommissioning through the OGA, and I also appreciate what the Scottish Government are doing through the decommissioning challenge fund. All those things are positive.

When I spoke to the Oil & Gas Technology Centre, which I will move on to in a moment, it said something interesting about decommissioning. On some rigs, there is an ability to do enhanced extraction techniques, but it is not possible to do them because of all the stuff on the rig that is doing the current extraction techniques. There is a need for a level of enabling decommissioning; taking off some of the widgets currently on the platform in order to put on new widgets so that the platform can be used to do things, but with different technology on it. There are smart things we can do on decommissioning that will ensure that we have jobs, but also that we have a positive way forward and get the maximum economic recovery out of the North sea.

The issue of STEM, which the hon. Member for Gordon mentioned, is important. I have been concerned as an Aberdonian, feeling the pain and seeing the changes and the negative atmosphere in the city, that we would have a situation in which young people would come through school saying, “No, I don’t want to go into oil and gas,” exactly as he said. The Oil & Gas Technology Centre is encouraging young people to get into STEM. Aberdeen Science Centre is doing similarly cool things to encourage STEM, and so is TechFest, which takes place every autumn. Those are all positive things that are supporting young people into STEM.

We do not have the same problems with the numbers of engineers that the north-east of England does—I have previously been told that it is much more difficult in the north-east of England to find some of the engineering skills that are required, but I could be wrong. That is something we could probably work together on quite positively, sharing the information and the positive things we have been doing on that, to ensure that best practice is shared and lots of people are encouraged into engineering.

As the hon. Member for Gordon said, some of the digitisation skills are important. One of the things I talked about with the Oil & Gas Technology Centre was the transferable skills that people get from studying something such as gaming, with the advanced interfaces they use, and how the virtual reality that can be created from that is incredibly positive and useful.

I have a couple more things to say—I am probably beginning to try your patience, Mr Sharma—and a couple of specific asks for the Minister. First, there is the oil and gas sector deal. I know that she is probably being heavily lobbied on that, but it could not be more important for the industry. We recognise that the Government have been working with the industry on that, and we look forward to that coming through.

Secondly, on the industrial strategy challenge fund, I understand that the bids for wave 3 closed at some point this week. Concern has been raised with me about the length of time the decision-making process will take. That is not so much the time in which funding will come through, but the decision-making process. If no shortlist is created until November, and we are looking at having a shortlist at some point late this year, no decision will be taken until a bit later than that. In reality, the chance that people can employ people and get up and running at the beginning of April next year becomes slimmer and slimmer. The quicker the decision can be taken—not necessarily the quicker the funding can come through—the better for projects being ready to go as soon as possible.

There are a couple more challenges. It is the case that Brexit is a challenge for the industry and that varying suggestions have come out about how much Brexit could cost the industry. I am still concerned about how visas are operating. I do not think the current situation works particularly well. I make a plea for post-study work visas to be brought back for the University of Aberdeen and Robert Gordon University. That would be a huge positive change for us. I know that the pilot took place in three universities in England and has been broadened out slightly, but it still has not come to the two universities in my city, and it would be incredibly positive for our industry.

On another specific offshore industry-type issue, I had a constituent come to me recently who is an EU citizen, but is not eligible to apply for the right to remain because he has spent so much time out of the country working for his oil and gas job that he cannot fulfil the residence requirements. He is a high earner, he pays tax and he is a good contributor to our city, and I am concerned that in these individual cases the Home Office’s policies are obstructive to ensuring that those highly-skilled people are able to stay in our city. That is a specific plea.

I have one last specific plea for the oil and gas industry. I have requested a meeting with the Financial Secretary of the Treasury and I hope that will happen in the near future. There is a major issue brewing around customs, because there is something called the shipwork end-use relief that is heavily used by oil and gas operators. Basically, it is a customs relief that occurs for stuff that is going offshore; the stuff is not eligible for the same customs fees that it currently would be, because it is going offshore. I received reassurance from the Financial Secretary that that would continue to be applied post-Brexit, but the action that Her Majesty’s Revenue and Customs is taking contradicts that.

There is a similar issue on manifests. Currently, paper manifests are okay for making a customs declaration, but we are looking at moving to a situation where electronic manifests are required. I understand that is because of changes in EU rules, but post-Brexit, the Taxation (Cross-Border Trade) Bill is not the same as the EU customs code, so they will possibly be able to revert to paper manifests, but we are not clear. There is an awful lack of clarity around that, and I am concerned that what the Financial Secretary is saying and what HMRC is saying are not the same.

That is becoming really important, because the changes have to be made in the early summer of this year. Companies are gearing up to make changes on the basis of HMRC guidance that is being contradicted by the Financial Secretary. Any assistance that can be given to ensure that those meetings take place and that clarity is given to companies would be incredibly useful.

The industry is in a good place, which is surprising after everything it has been through. There is a positive future. One of the amazing things it is doing is focusing on decarbonisation. That seems a bizarre thing for the oil and gas industry to do, but it has more of a need to do it, and more of a responsibility to do it, because it is the oil and gas industry. I am pleased that that has been written into what the Oil & Gas Technology Centre is doing, and that all the oil and gas companies, working together in ways they never have before, are positive about looking toward decarbonisation.

There is a positive future for the oil and gas industry. We must get it right. We must continue to encourage companies, we must continue to support and work with organisations such as the Oil & Gas Technology Centre and, when industry bodies and companies come to us and say, “This specific issue is a blockage,” we must look at those specific blockages and ensure that we do what we can to get rid of them, listen to industry and make the changes that are required.