Moving too quickly from oil and gas to green technologies will put thousands of jobs in the supply chain at risk and undermine the energy transition, MPs were told today.

Company executives Louise Kingham and Hebe Trotter warned the Scottish Affairs Committee that a lack of clarity around tax and regulation would see investors divert their money elsewhere in the world, with jobs and skills being lost.

“A decision by a company not to go forward with a contract doesn’t just impact them but the supply chain underneath,” said Ms Trotter, vice president of global government relations at Harbour Energy.

“It has a massive cascading effect to maybe 20 other companies. Those are the same companies that will be providing support to the clean energy transition that we need.”

Ms Trotter said Harbour Energy was “paying a lot of tax” and had reduced its workforce by 300 as a result of the energy profits levy [windfall tax].

She said a mismanaged transition – which she called the “valley of death” – means those skills will go abroad, or they don’t get developed in the first place, and that undermines the ambitions of the clean energy sector.

“Reports say there is a 90% transferability of oil and gas jobs into clean energy jobs. But with a mismanaged transition and without a managed decline of the oil and gas sector we are at risk of reducing our oil and gas workforce by half before we have the requisite jobs on the clean energy side,” she said.

Speaking on the day that BP announced it was cutting back on investment in renewables in order to invest more in oil and gas, Ms Kingham, a vice president of BP Europe, added: “What we need is active stewardship of the basin.

“We are in a holding pattern. The practicalities are that we cannot invest until we have certainty around that framework and feel confident it is a good use of investors’ money.”

She said that without clarity from government then “we start to create the danger of a cliff edge where we cannot retain the workforce.”

She warned that decisions could not be made today, not knowing what the regime would look like from 2030.

Addressing the reserves of oil and gas that remain, Ms Trotter, said there are at least 20 years of extraction available.

“There is a huge economic opportunity in Scotland and for rest of the UK if we are able to proceed. But that is only going to be possible if we see a better, more sustainable fiscal environment.”

She said that both BP and Harbour have to compete for capital from within their own businesess and there are other countries that have a “more favourable fiscal environment.

“Every pound that is not spent in the UK means fewer jobs and lower tax receipts for the Treasury, but critically lower investment which means less growth and less economic value.”

She noted that “70% of the UK’s energy needs will continue to come from fossil fuels and the Prime Minister has said oil and gas will be around for decades to come.”

Gas accounts for 50% of Britain’s energy and has four times lower emissions than if the UK imported LNG [liquefied natural gas] from other countries, she said.

Commenting on the new GB Energy company being set up in Aberdeen, Ms Kingham said she would like to see it helping to underpin the supply chain, de-risk private investment and focus on providing infrastructure, such as port developments.

“If if replicates what private firms are doing then that would not be the best use of the money.”

In a later session, Russell Borthwick, chief executive of Aberdeen & Grampian Chamber of Commerce, also warned against the transition going too quickly and disrupting the supply of labour.

He said universities were paring back degree courses because of negativity surrounding the oil and gas sector.

Mr Borthwick warned against repeating the errors of others. New Zealand had been forced to reverse some decisions after it suffered power outages.

Commenting on the taxes being imposed on oil and gas companies he noted that Celtic Football Club made more profit than Harbour Energy.

Jenny Stanning, external relations director at Offshore Energies UK, said: “Our supply chain is the envy of the world”, but she warned that workers were being lured abroad by those with more certain regimes.

“We have to make sure these workers stay in the UK,” she said.

See also

BP returns to oil and gas