1st October 2016
Established 1872. Online since 1996.

Oil industry fears as BP announces 600 jobs will go

Local and national politicians have expressed concern after BP announced plans to shed about 600 jobs from its operations in the North Sea.

The news emerged today, with job losses expected across various sites although BP was unable to say what the impact in Shetland might be.

BP communications manager Stephanie Millar said: “Our UK North Sea people are split across multiple sites, but mainly Shetland, Aberdeen, Falkirk and offshore. We have some people working in London and South Korea on our major projects (Quad204 and Clair Ridge).

“The reduction of 600 roles will take place between now and the end of 2017, with the majority of these roles leaving in 2016.

“We are not able to break down the 600 figure into staff versus agency contractor, or between different sites, until we go through collective consultation which starts tomorrow (Wednesday).”

Ms Millar added: “There are two main reasons: firstly, we are responding to a challenging business environment with lower oil prices, but secondly what we have announced today will help us to ensure a long-term, competitive and sustainable business.”

Councillor Alastair Cooper said: “This is no surprise given the low oil price, we don’t know how low it will go. Sullom Voe terminal need to position itself so that when new business comes, it’s in a position to win it.

“My concern is that if folk go with early retirement, [the terminal] will lose a lot of experience which is not easily replaced.”

MSP Tavish Scott said: “BP have been a vital cog in the Shetland economy. The Sullom Voe oil terminal has provided secure, well paid jobs for many local people since the 1970s. So this latest jobs blow is not good for the local economy. I am concerned that many oil companies are taking quick job cutting decisions in light of the falling crude oil price.

“But every commentator believes that oil prices will rise again. I want to ensure there is North Sea oil and gas production for the long term. BP have to ensure they have a skilled workforce ready to reinvigorate the North Sea when oil prices start to rise again.”

The oil giant said the majority of the staff and contractor posts would go this year, with the rest expected to be lost by the end of next year. The job losses amount to about a fifth of BP’s North Sea workforce.

Mr Scott added: “BP have made a colossal investment in West of Shetland oil and gas fields. But Sullom Voe has to win work otherwise the future looks less and less certain. I will be pressing BP to commit to Sullom Voe and its long term future.”

AboutRosalind Griffiths

I am a Shetland Times reporter covering news, including health stories, and features. I have been in Shetland for more than 30 years.

View other stories by »

28 comments

  1. John Tulloch

    A huge disadvantage for SVT must now be the high level harbour charges for tankers, thanks to recent decisions by BP.

    Billions of pounds worth of oil will be taken from fields west of Shetland that will now bypass Shetland completely. This decision, which has been waved on by the ruling authorities, has led to eye-watering increases in Sullom Voe harbour charge which can only increase the incentive for oil companies to bypass Shetland with oil from subsequent fields.

    These oil fields, were Shetland independent, would be within Shetland’s own Exclusive Economic Zone (EEZ) yet the SIC, somewhat feebly, was snookered in negotiations by exclusion from Schiehallion-related meetings because “different BP departments didn’t talk to each other”. How convenient for BP!

    All the “positive” London meetings between SIC and BP in the world cannot now alter the high SVT harbour charges, barring miracles, that horse has bolted.

    An autonomous Shetland government would grant permits to drill for oil subject to its conditions and WOULD NOT BE EXCLUDED from such meetings.

    Reply
  2. Chris Johnston

    I suspect the cuts will not end at 20%. Brent fell below US$31/barrel yesterday and is forecast to fall to US$20 or even US$10. Any price recovery is far in the future.
    The more significant threat is to governments that assumed Brent would be at US$100/barrel when they set their current budgets. The resulting revenue shortfall will cause serious problems.

    Reply
  3. John Tulloch

    No respite it seems, Brent crude below $30/barrel with US stockpiles at record levels and Iran on the threshold of returning to world markets.
    http://www.channelnewsasia.com/news/business/brent-below-us-30-a/2423948.html

    Reply
    • Chris Johnston

      No respite indeed. Brent closed today the 15th at US$29.10, down 6.25%.

      Reply
  4. Gordon Harmer

    Had we voted yes in September 2014 we would possibly be looking at an independent Scotland in around two months time. On the 10th of March 2013 John Swinney said; “The surge in investment and the rising price of oil mean that the early years of an independent Scotland are timed to coincide with a massive North Sea oil boom”. Not only does John Swinney need a new abacus he needs a new chrystal ball.

    Reply
    • James Watt

      Yeah, because John Swinney was the only person predicting the oil price to stay high, if only he’d used the UKs governments figures from 2013 then he’d have seen this coming.

      https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/212521/130718_decc-fossil-fuel-price-projections.pdf

      Must be some mistake, the UK government wasn’t predicting a crash in the price, oddly enough it predicted a slow steady rise in prices, just like every other agency was in 2013.

      Maybe John Swinney had problems with his prediction because he was using Goerge Osbornes abacus, its predictions for the UK deficit in 2015 was only out by a mere £69 Billion.

      Reply
      • Gareth Fair

        James,
        You cannot argue you were not warned about the risks of oil and gas price volatility.
        There were enough people, including George Osbourne doing exactly that.
        Osbourne stated the Scottish Government plans rested on a “volatile and declining” source of revenue.
        The response of John Swinney was to accuse Osborne of using “shock tactics and scaremongering”.
        The Better Together campaign argued that relying too heavily on North Sea oil would be dangerous as it is such a volatile commodity. Under independence, Scotland would have to draw on oil revenues to fund public spending – so if the amount raised suddenly fell, services could suffer.
        Ed Davey (Energy Secretary) stated, “if it (Scotland) becomes over-dependent on the tax revenues of oil and gas it would have to raise taxes an awful lot when the oil and gas declines further, or it would have to slash public expenditure. So I think Scots should be very worried that the SNP are putting so much emphasis on oil and gas,”

    • Gordon Harmer

      Yes James, but Goerge Osborne was not trying to con the Scottish electorate that independence was such a wonderful Utopian promised land with untold riches thanks to Scottish (or should that be Shetland) oil.

      Reply
      • James Watt

        You are right Gordon, Osborne wasn’t trying to con the Scotish electorate, instead he has been allowed to con the UK electorate with his predictions of how the Tories austerity agenda will return the UKs deficit to a surplus.

        He’s failed to meet any of his own predictions for the deficit in the last term of government, borrowing over £200 Billion more than predicted between 2010-2015, and as my link below shows he’s not doing any better so far this term.
        Having seen your reaction to John Swinney managing to end the year with a budget surplus I can only imagine you’re apoplectic at Osbornes failure to tackle the deficit, or does Osborne not receive the same scrutiny since he’s on the same team as you?

        http://www.theguardian.com/business/2015/dec/22/latest-borrowing-figures-undermine-george-osborne-deficit-target

      • Gareth Fair

        James,
        The Scottish budget deficit for 2013-2014 was 8.1% of GDP vs UK wide deficit of 5.6% of GDP.
        The IFS predict Scotland’s deficit in 2014–15 and 2015–16 to be 8.6% of GDP and 8.0% of GDP, respectively, compared to 5.0% and 4.0% for the UK as a whole.
        ‘The gap would likely be even larger if oil prices remained at current levels – which are significantly below those used in the OBR’s December forecasts – but could be smaller if oil prices or production rebound.’

        To put that into perspective in cash terms, Scotland’s fiscal deficit in 2015–16 would be more than twice as high per person (around £2,600) as that in the UK as a whole (around £1,200).

        http://www.ifs.org.uk/publications/7637

    • Robert Sim

      We understand that you vehemently oppose Scottish independence, Gordon, and won’t let the matter lie. How about trying to build constructive relations with the folk who held a different point of view at the time of the referendum? Or is your interpretation of ‘better together’ to stick it to your erstwhile opponent at every opportunity?

      It makes very little odds anyway. People don’t support independence on a single factor like the price of oil; and you will have noticed the strong and sustained upward trend since 2013 in support for independence – something that led to the desperate last-minute promises of Gordon Brown et al. The economic argument will have influenced some ‘don’t knows’ in September 2014; but, overall, support for independence is based on a much more complex set of thought processes; and you banging on about something that is a relatively small percentage of the Scottish economy just conterproductively gains more support for ‘yes’.

      Reply
      • John Tulloch

        Happy Up Helly-Aa, Robert!

        Ahh! Good old Up Helly-Aa, that wonderful institution that marks Shetland out as unique and different from the rest of Scotland. Will you be participating?

        Perhaps, there’s a competing event at the Picts Castle? 😊

      • Gordon Harmer

        Robert, when you and your lot learn the meaning of democracy and respect the will of the Scottish people (who were not swayed by anything Gordon Brown Said) and stop banging on about indy ref 2 and insisting Sturgeon includes it in her manifesto, I will stop sticking it to my erstwhile opponent at every opportunity.

      • Gordon Harmer

        Robert, your conspiracy theory about what Gordon Brown said has just reminded me of this link, it is a bit long winded but well worth a listen. http://www.crassh.cam.ac.uk/events/25833

      • iantinkler

        Robert Sim. The latest poll on Scottish Independence shows the “Yes” vote on only 44%, less than at the time of the referendum. Maybe Scotland is becoming vehemently oppose Scottish independence. Perhaps it really will be once in a generation. Maybe Nicola’s honeymoon is over and the real mess the SNP have made of things is beginning to hit home. What a shame Labour is led by such a donkey, keep Trident, but do not arm the submarines!!! A bit like abandoning Trident and using American nuclear under NATO in Scottish ports. Socialist defence policies are such fun. Lol.
        http://whatscotlandthinks.org/questions/how-would-you-vote-in-the-in-the-scottish-independence-referendum-if-held-now-a#line

      • Brian Smith

        Goodness, these four contributions (by Tulloch, Tinkler, Harmer) tell us a lot about Wir Shetland! Quite, quite mad.

      • James Watt

        “The latest poll on Scottish Independence shows the “Yes” vote on only 44%, less than at the time of the referendum”

        Ian, I’ve just had a look at your link and its left me a little confused, but as a man of science you are probably the best person to help me understand what those numbers mean.
        The table shows Yes-44%, No-50% and the DKs-7. Once the don’t knows are removed what do the percentages become and which side do you think the stats show should be happiest with how polling has gone since the referendum?

      • Robert Duncan

        Which poll is this, Mr Tinkler?

        ‘Yes’ hasn’t polled as low as 44% since May 2015. Indeed, the past week has seen report of polls suggesting a vote to leave the EU would prompt a majority of Scots to favour independence.

      • Robert Duncan

        Indeed, the only poll I can find on the matter from around the 14/01/15 date highlighted in the line graph you link, is this from Survation on the 13th, which has No leading Yes by only one percentage point.

        http://survation.com/wp-content/uploads/2016/01/Final-Scomnibus-I-Tables-DR-1c0d2h9-51.pdf

      • iantinkler

        Simples, James, look at the table for the October 2015 , January 2016. Yes Vote, October 2014 49/% .
        January 2016 45/44%. (Definate downward trend.)
        No vote,October 2014 45%.
        February 2016 46/50%. (Definate upward trend.)
        You do not need much science to take the “mean” and interpret how long Nicola will be waiting for her target 60%. Answerer is infinite time.

        Can you understand this, Robert Duncan, it is not hard maths to follow.. Also it is only a statistical indicator,drawn from the most recent data, not a scientific proof.
        http://whatscotlandthinks.org/questions/how-would-you-vote-in-the-in-the-scottish-independence-referendum-if-held-now-a#table

      • iantinkler

        Sorry, typing error. Simples, James, look at the table for the October 2015 (SHOULD BE October 2014), January 2016. Yes Vote, October 2014 49/% .
        January 2016 45/44%. (Definate downward trend.)
        No vote,October 2014 45%.
        February 2016 46/50%. (Definate upward trend.)

      • Robert Sim

        Ian T. – Good try; but I quite clearly said to look at the trend in support for independence from 2013 on, not autumn 2014 . You will see that there has been a strong upward movement in favour of independence since 2013 and that was quite clearly a result of the referendum campaign. Support for independence has I think moved on to a new plateau, from where, the next time round, it can only increase again. That’s what happens when people are asked to think about the matter.

        I smiled at Brian’s comment. I couldn’t possibly comment, Brian, but one of the posts you mention certainly seems bizarrely irrelevant.

      • Robert Duncan

        I understand the numbers perfectly well, Ian. Perhaps you don’t understand the question. I asked you specifically which poll those numbers came from. Who conducted it? What was their sample? When did they do it? None of this is answered as your link does not provide any detail of a source.

      • Robert Duncan

        Nevermind, I have found it. It is from a Panelbase poll (I’m sure you’d have considered them this reliable eighteen months ago…) commissioned by the Sunday Times, with a Scottish sub-sample pulled from a wider UK base. The figures are however as you report, so at least they’re back by something, if just a single poll that breaks away from the general trend.

        I thought the following was of minor interest though:

        Of those sample, 451 said they had voted Yes in Sep 2014, with 557 having voted No. But in this poll 441 said they vote Yes (indicating vote retention of 97.8%) compared to 511(91.7%) voting No. So it seems it is No voters that are breaking to Undecided.

        Or more to the fact, that Panelbase’s sample included slightly too many No voters from the get go.

      • iantinkler

        “Support for independence has I think moved on to a new plateau”. Your thoughts of a plateau are actually a slope Robert Sim. That is not a speculative thought, just a simple fact. Whatever makes you think the “Yes” is heading towards 60% when the actual facts show support slipping away.?

      • Robert Duncan

        “That is not a speculative thought, just a simple fact.”

        Even accepting the standalone poll you reference – which is facile behaviour whomever the pollster and whatever their methodology – the running average has the “Yes vote” consistently at around 45%, with occasional spikes higher than that. It hasn’t been consistently lower at any point since the referendum. A plateau seems a very accurate description to me, while a “slope” is unquestionably nonsensical.

  5. Alastair Ball

    I am afraid that those who can produce oil economically at $10 per barrel will continue to push the price down, until the competition like US Shale is finished off. Iran coming on stream will easily make up production if Russia reduces output. North Sea oil is tottering on the brink.

    What about gas prices ? How long till we see the “For Sale” sign for a brand new gas plant, on the plus side, it comes with manufacturers warranty and low mileage.

    Commodity prices through the floor, stock and bond market volatility, currencies manipulated, this bubble, that bubble.

    In the passing 8 years, I now do see the need for Shetland to take care of its own resources and make use of the talent within the Islands.

    Time to learn the lessons of history and act.

    Reply

Your Comment

Please note, it is the policy of The Shetland Times to publish comments and letters from named individuals only. Both forename and surname are required.

Comments are moderated. Contributors must observe normal standards of decency and tolerance for the opinions of others.

The views expressed are those of contributors and not of The Shetland Times.

The Shetland Times reserves the right to decline or remove any contribution without notice or stating reason.

Comments are limited to 200 words but please email longer articles or letters to editorial@shetlandtimes.co.uk for consideration and include a daytime telephone number and your address. If emailing information in confidence please put "Not for publication" in both the subject line and at the top of the main message.