Unions To Hold Oil Crisis Talks

Unions and employers in the oil and gas industry are to meet to discuss the threat to jobs in the wake of the dramatic fall in oil prices.

The move follows an announcement from BP of hundreds of job losses, sparking warnings of further cuts and calls for Government action.

The firm said it expects to shed 200 onshore staff, while 100 contractors' posts will also be axed, which unions said was a devastating blow'' to the industry.

Holyrood's Energy Minister Fergus Ewing demanded action from the UK Government, saying the employment threat from the oil price fall has produced the the most serious jobs situation Scotland has faced in living memory''.

Energy Secretary Ed Davey visited Aberdeen to talk to leading figures in the North Sea oil and gas sector, saying he wanted to see what could be done to maintain jobs and help anyone being laid off.

We want to do everything we can to minimise any impact. The North Sea is crucial to Britain's energy industry and is a vital part of our economy,'' he said.

Unions fear the BP job cuts are the first in a series of announcements from oil firms as a result of cheaper prices.

They will meet with Oil and Gas UK in Aberdeen today and will press for jobs to be maintained despite the plunge in oil prices.

Rail, Maritime and Transport general secretary Mick Cash said: RMT believes that these big, wealthy companies are forcing offshore workers to bear the brunt of what we see as a complete failure to plan for a downturn like the one we have been plunged into due to the slump in oil prices.

Instead they have gone for a short term slash and burn approach that will have long term implications for the future of the entire industry and the security of the UK's energy supplies.

RMT, along with our sister unions, is meeting with Oil and Gas UK today where we will be pushing for a halt to the job cuts programme and an emergency package of measures to stave off the destruction of both jobs and infrastructure.

The union is also continuing to lobby politicians for incentives to allow exploration, maintenance, safety and engineering development works to take place during this emergency period for the industry.''

North Sea oil expert Sir Ian Wood, who led a review of the industry for the Government which reported last year, said a major tax cut was necessary to give producers the confidence to keep their operations going.

He said the supplementary charge on profits should be cut from 30% to 20% although he acknowledged that would have little impact in the short-term because prices were so low.

Sir Ian said: The key is to stabilise the industry, avoid a real crisis of confidence and ensure they can see a sustainable future.

There's virtually nothing, fiscally, that can be done at 45, 50 dollar oil to have any impact because, at that stage, very few operators are making profits and if they are not, they are not paying taxes.

What is really important is to look now and set a tax regime and make it absolutely clear it's a medium-term tax regime so it will continue as the oil price recovers.''

That would involve at least a further 10%'' off the supplementary charge, he said, adding:On that basis hopefully operators will have the motivation to be prepared to see their way through what's going to be a very difficult period.''

Chief Secretary to the Treasury Danny Alexander said the UK Government will take the time until the Budget announcement on March 18 to get the right measures in place to support the North Sea.

I've discussed the issue directly with Sir Ian Wood on many occasions and what we have already done is announce some very significant changes,'' he told BBC Radio Scotland's Good Morning Scotland programme.

I think particularly the new investment allowance, which is about giving people significant tax breaks on the new investment that we want to see.

Ed Davey announced yesterday a commission which will be led by Andy Samuel, who is leading the new Oil and Gas Authority, to look at precisely what is needed.

I think that it is right to say, with the Budget just a few weeks away, let's use that time to make sure we have the right, comprehensive measures to support this crucial industry.

Sir Ian also rightly observed that when prices are this low, people are not making profit so they are not paying taxes anyway, so I think we can take that time to get things right.

What matters is having a regime that, exactly as Sir Ian says, incentivises investment and encourages people to stay the course in the North Sea.

Because, of course, the oil price, all the analysts suggest, will start to recover in the years to come, so we need to put ourselves in the position where the infrastructure is being maintained, where the fields are being maintained, so that we can capitalise as and when that does happen.

There is still a huge amount of oil and gas in the North Sea, and as part of the United Kingdom we can make sure that that is stabilised when prices have recovered.''