8 Days Remaining

Wednesday 25th
posted by Morning Star in Editorial

UNITE has urged state intervention after the publication of the Oil & Gas UK 2015 activity report. The publisher is the inelegantly named OGUK, which speaks on lobbying and research matters for companies active in the British offshore continental shelf oil and gas industry.

But it is the Offshore Contractors Association (OCA) that is the face of employers in hard bargaining with the industry’s workers. Just at the moment that the OCA faces a consultative ballot, OGUK pulls the metaphorical rug under any hopes that North Sea energy could be the basis for a future for decent jobs, let alone economic regeneration.

Unite holds agreements also with the Drilling Contractors and the Floating Production Operators Association. But, as the lead body, the OCA dominates mechanical, electrical and construction modifications and maintenance, design and project engineering. These are skills that our nations desperately need to be employed in restoring manufacturing activity to these islands.

Combined, OCA members have a turnover in excess of £3 billion, a workforce of more than 20,000 employees and a presence on virtually every installation on the British Continental Shelf. Companies such as AMEC, Aker Offshore, Cape, Petrofac and others have done very well out of the North Sea for the last 40 years. Now, they plead poverty.

For the first time since before WWII, a majority of British workers now face low pay, insecure work, poor training and a lack of health and safety at work as the standard daily experience. Many groups of organised workers have kept these threats at bay for a very long by sustained vigilance and militancy but now, even with one of the strongest groups of workers, capitalism bares its teeth once again when it is in trouble.

Last autumn, a “clever” little secret strategy was adopted for the global oil industry by the United States and Saudi Arabia that has resulted in an “oil price plunge.” Obama seemingly sanctioned this price-dumping strategy as an economic warfare device to punish Putin over Ukraine.

George Osborne’s supposed recovery rides on the back of it. Deflation and stagnant prices in many sectors have helped to shift opinion polls in Tory favour, despite tax scandals.

Despite a short upturn, the price of oil has slumped by a half since last summer and that was following the longest continuous decline for two decades. More US shale oil, due to intensive fracking, and some Libyan oil has pushed up supply, while the long slowdown arising from the endemic problems of the Eurozone has reduced demand in a big part of the globe. Increasing speculation in the US dollar makes oil more expensive in real terms, pushing demand even lower. Combine the whole melange and there is a recipe for plummeting oil prices.

The US-based oil giant ConocoPhillips is cutting 230 out of 1,650 jobs in Britain. Aberdeen-based Wood Group has adopted a pay freeze for staff and cut contractor rates. Apache, one of the North Sea’s biggest producers, has imposed a 10 per cent reduction on its contractors’ wages.

As many as 35,000 oil and gas industry jobs could go in the next five years. The new scenario adds to a decline in British oil and gas production unbroken since 1999 and North Sea oil is, according to the BBC, in “crisis.” Just before Christmas, the chair of the Association of British Independent Oil Exploration Companies, Brindex, publicly stated that the industry was “close to collapse,” with almost no new projects in the North Sea being profitable with oil below £38 a barrel.

Will Prime Minister David Cameron repeat his call for companies to give Britons a pay rise after figures from the Office for National Statistics showed that the fall in oil prices in recent months has led to a 16-year high in the profitability of companies?

More importantly, will he call for the industry to invest in renewable energy technology that could provide skilled jobs for the young people of Aberdeen for a generation to come — and match the sums from central government?