£16bn North Sea deal 'will protect thousands of oil and gas jobs'

A major new deal to help the oil and gas industry move to a low-carbon future will help to protect thousands of jobs in the north-east, it has been claimed.

The £16 billion transition deal has been agreed between the sector and the UK Government, with new targets for cutting emissions from offshore operations.

That aims to see emissions cut by 10% by 2025 and 25% by 2027 - with a commitment to slash emissions by 50% by 2030.

There will be joint industry and government investment of up to £3bn to replace fossil fuel-based power supplies on oil and gas platforms with renewable energy, £3bn on carbon capture usage and storage, and £10bn for hydrogen production.

Ministers claim it will support 40,000 jobs across the sector and protect thousands of existing businesses.

Deirdre Michie OBE, chief executive of industry body Oil and Gas UK, said: "The North Sea Transition Deal is a transformative partnership which will harness the expertise of the UK offshore oil and gas industry to urgently meet the country’s climate ambitions of net zero emissions by 2050.  

"It will unlock billions of pounds of investment and see government and industry work together to deliver a homegrown energy transition, realising innovative low carbon solutions that can be exported globally.  

"The deal will safeguard UK energy security, providing affordable energy to millions of households, secure tens of thousands of jobs in industrial heartlands across the country and support the UK economy.

"It is the first deal of its kind by any G7 country and a striking example of the UK showing global leadership on climate change ahead of COP26."

Under the deal there will not be a ban on exploration activity - but North Sea licensing rounds will be subjected to greater scrutiny.

That has come in for criticism from environmental groups, who say the government should be refusing any new licences.

Meanwhile Aberdeen South MP Stephen Flynn says that the deal is welcome, and has called for the majority of investment to be targeted on Aberdeen.

But he says the deal comes too late for the thousands of jobs lost during the oil price crash last year.

Rob Doepel, head of energy at professional services firm EY, said: "Our latest figures shows that diversification is not just inevitable for upstream operators and contractors, but the need is likely to have been accelerated by the pandemic.

"While ‘energy transition’ is now largely accepted as an opportunity to expand addressable markets, capture growth and redefine investor perceptions, the NSTD marks an important step in turning that mindset into a technical, on-the-ground reality - the creation of a pathway for the traditional UK oil and gas skill base, innovation, and entrepreneurial spirit to be pivoted to green energy.

"EY was asked by OGUK to support the project  – a role we were proud to lead. Our team’s knowledge of both industry and government practices helped drive a route forward to reach a final transformative deal for the UK. 

"EY’s long-standing expertise and relationship with the oil and gas sector helped position the industry to contribute to the UK net zero ambition and accelerate the process of turning ambitions of decarbonisation into action."

You can find more reaction and details on the deal at Energy Voice.