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Who regulates ​the regulators?

Who regulates ​the regulators?

By Hamish the experienced oilfield professional


“Who should we blame for the recent shoddy performance of UK Decom plc” was going to be my topic this month, but I’m afraid there is currently a much more pressing and fundamental issue – the very survival of the UK offshore Oil and Gas industry’s capability and core resources? The simple difference between being a satellite operation of Houston, Texas, or a vibrant global hub. With Covid-19’s inhibiting factors overlaid, this becomes a complex issue with many subplots and interested parties.

To the worker splitting open bags of drilling mud beside quayside silos, it is about raising a family and attaining a simple pride in doing a good and necessary job. To the company employing him/her, it is the core requirement to generate income to sustain a structure of delivery and commercial survival. To the nation, it is about creating a sustainable economic model that creates wealth and underpins the societal structures we all term “The Western way of life!”

But what are the implications and what does it mean for those that are responsible for regulating the sector, or the bodies that purport to represent the Oil and Gas sector and its specific interests? To them, you would think people’s jobs would be really important, wouldn’t you? Well, I’m asking the questions to whom and why, after reviewing recent events. This led me to examine their capabilities and actions, not just their rhetoric and media releases.

Where else to start but the Oil and Gas Authority (OGA). Very adept at blowing their own trumpet and generating mountains of glossy reports and complex “Infographics”. But, what do they do besides? Well, back in April, they were approached with a novel concept for stimulating the market by advancing the return of tax reliefs.

Along with other initiatives, the OGA made a big noise about evaluating the industry’s ideas and taking them to HM Treasury. In May, the OGA Decommissioning Taskforce was formed and two of the primary targets for support were “Wells P&A” and “Small subsea decom activity”. The basic economics of both having already been previously assessed – (Silence!). In August, nearly 4 months later, the industry body, Decom North Sea (DNS) requested an update on progress, to break the secrecy of the OGA internal procrastination.

But it appears, however, that in the meantime, the concepts developed with DNS’s members to use an already familiar and adopted HM Treasury process to access the substantial funds already paid in by the industry (Some £12.9 Billion in “credit”) and making these available to stimulate the works, through a very cleverly structured and well thought-out scheme, focussing on the advanced early repayment of decommissioning tax reliefs, had been side-lined by OGA. This scheme was at zero cost to the industry, Treasury and the UK taxpayer. Instead the OGA has approached HM Treasury for a substantial “Investment” loan (£100m), necessitating substantial repayments and creating unknown future cashflow issues. Correctly, it was turned down, because Her Majesty’s Government (HMG) policy for over 40 years has been NOT to fund decommissioning - no brainer!. What were OGA’s motives and what were they thinking? They never even consulted with the industry in the interim.

Now you wonder why the clever, experienced and well-paid individuals in the OGA, with their MSc’s in Decommissioning, did not know what everybody else in the industry does?. We now have to wait to see what can be saved from this mess. Meantime, jobs and UK industry capability are disappearing from the UK supply chain. One has to wonder whether the OGA really cares?

So, we turn in hope to the self-declared “Proud champions of the UK offshore oil and gas industry”, Oil and Gas UK (OGUK). Deemed to represent the “Whole O & G sector”, they stood down their own “Supply chain forum” some two years ago and only resurrected it in the last couple of weeks, under severe criticism from their own members and the sector in general. They have proved totally incapable of balancing their portfolio of Operators, Teir-1 Contractors and SME’s. Yet, they spew out endless statistics and media “Soundbites”. They were also notable for their silence and physical absence in supporting both the “Wells P&A” and “Small subsea initiatives” previously referred to.

Have no doubt, they only have the interests of “Big Oil” at their heart, exemplified by a Chief Executive who is on record as declaring that she only an interest in “High-tech jobs” and saying so in front of the Minister responsible for BEIS, until challenged by another participant in the dialogue. So, go hang the “Bag-splitter” and his family!

Thankfully though, there are more straightforward and less duplicitous interest groups, none more vocal at the grassroots level than the (good ol’) OILC, now part of the national RMT Union, led by a Regional Organiser not averse to taking on the oil monoliths. He has been working tirelessly to lobby Governments (UK & Scottish) and Trade Bodies, actively opposing Shell Expro’s Curlew FPSO jobs migration to Norway and supporting the Wells P&A programme ideas to get his members back onto rigs and vessels on the UKCS.

Subsea UK, led by a seasoned, level-headed Chief Executive that has developed a members’ organisation that is an exemplar to all others. Great communications, constant fostering of innovation and review of process and a deeply nurtured belief in collaboration that manifests itself in global marketing, joint technical development and commercial opportunities. Recent diversification to other sectors has proved, at least, that some capability can be retained along with globally recognised expertise.

On a geographical and more diverse sectoral basis, East of England Energy Group (EEEGR) has proven, without doubt, the benefits of a parochial membership base, but with a much wider vision. It is directed by an ever-enthusiastic and approachable CEO, who came from the charity sector but has applied sound values and interpersonal skills to develop collaboration and a very effective lobby for jobs in their home patch, without the kudos nor advantage of the private funding sloshing around Aberdeen.

So, finally, to the once moribund Decom North Sea (DNS), emasculated by years of leadership emanating from Operators and hamstrung by that limited oil company culture. Unhappy members and falling numbers, until the new Interim Managing Director took over a few months ago. Ignoring Thatcher’s philosophy, he has taken the organisation on a full “U-turn” and restructured things to actually provide what member’s want and need – work and job opportunities. Now the driving force behind the initiative to save jobs, resources and capability in the decommissioning sector and beyond, DNS is pushing aside the obstacles and ineptitudes of other more vocal industry bodies to access the £12.9 Billion of “Credits” in HM Treasury’s accounts, to actually help the “Bag-splitter”, the SME director, the Tier 1 Contractor and even the oil company AND, most importantly of all, to retain the jobs – that are so very valuable, to the individual, the sector and the country!

But to bring this about we need joint action – NOW! Who would you go to?

Read the latest issue of the OGV Energy magazine HERE.

Published: 14-09-2020

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