UK unions urge government to take stakes in North Sea oil, gas

London — UK North Sea trade unions called on the government Monday to directly invest in oil and gas projects to tackle the crisis in the industry resulting from coronavirus and plunging oil prices, and protect thousands of jobs.

The call for the government to directly finance oil and gas projects came from the 'Offshore Coordinating Group', comprising major trade unions, and came after the National Union of Rail, Maritime and Transport Workers (RMT) urged the government to take stakes in North Sea operating companies including BP and Total this month.

Industry group Oil & Gas UK has said collapsing oil prices represented a "body blow" to the sector and that companies such as drillers face a major threat.

It estimated capital expenditure in the UK oil and gas industry could fall by a quarter this year, although any move to nationalization remained well beyond what operators would be willing to contemplate.

UK oil output has revived in recent years, hitting around 1.1 million b/d of production, however, the Dated Brent crude oil benchmark hit 21-year lows last week, at around $13/b.

At the weekend, Houston-based driller Diamond Offshore initiated bankruptcy proceedings in a signal of the drilling sector's difficulties.

In a statement, the Offshore Coordinating Group estimated around 25 mobile drilling units were stationed, inactive, on Scotland's east coast, with more along Norway's coast, and highlighted knock-on damage to other companies.

Service companies are being hit not only by a standstill in investment, but the deferral of inessential maintenance, such as a major shutdown of the Forties pipeline that was planned this summer.

"With those drillers go the well service companies, drilling fluids, wire line, tubulars, and a whole host of other supply chain companies," the trade union group said.

"Our conservative estimates suggest we could be looking at upwards of 3,500 workers displaced by September 2020 and most of the drilling sector workers have been told it will be 2022 before there is any upturn in activity," the group said, also highlighting the difficulties of helicopter providers as a concern.

The unions welcomed the government's 'furlough' scheme, which pays a portion of the wages of temporarily laid off workers nationwide.

But the group said: "We see it as vital that we get the government to invest in projects, not as operating partners but as equity partners, providing low-cost loans to operators."

It outlined a plan for the government to make up the shortfall in the value of oil and gas projects as a result of the oil price crash.

"Our market has now fundamentally changed. Our economy is fundamentally changing and therefore it is time for a fundamental change in our industry," the group said. Signatories included the RMT, Unite and the General, Municipal, Boilermakers (GMB) union.