Multinational companies are controlling the energy sector

LISTENING to a radio phone-in show the other day highlighted for me the problem facing workers in the oil and gas sector.

For the last 40 years or so, the multinational oil companies have controlled oil and gas production in the UK Continental Shelf (UKCS).

To date, 42 billion barrels of oil and gas has been extracted which at an average of $50/bbl is $2.1 trillion in monetary terms. The UK received only the tax associated with the production. And now that the oil price is down the oil companies have cut back production and are laying off the workers as this affects their profit.

Said workers then become the state’s problem, as they are due unemployment benefits.

Why is there no UK state-owned oil company such as those operated by countries such as Saudi Arabia (Aramco), Iran (NIOC), Abu Dhabi (ADNOC), where all hydrocarbon production comes under the control of the State and thus the State reaps all of the benefit?

In the UKCS the hydrocarbons are being depleted in many reservoirs, thus the offshore oil platforms must be decommissioned so we are told this entail lots of work and, therefore, jobs. The trade body believes that decommissioning will cost up to £55bn by 2050, while Revenue & Customs estimates that the taxpayer will pick up £16bn of the bill through tax relief on decommissioning.

An essential ingredient for this type of work is heavy-lift vessels, so the lion’s share of the work will go to the companies owning and operating these vessels, but there is no UK company with such vessels. The Dutch, French and Italian companies do own these vessels (the same companies who installed the platforms) so they will no doubt be awarded these projects. One Dutch company has even built a construction vessel specifically designed for this type of work at a cost reported as $2bn.

Some experts estimate that there are still 24 billion recoverable reserves in the UKCS. Will the multinational oil companies still control production or will the UK Government claim back the North Sea as part of reclaiming the country? Charles Campbell McCann, 14 Chesterfield Gardens,