North Sea Oil and Gas Industry

(Urgent Question): To ask the Secretary of State for Energy Security and Net Zero if he will make a statement on the future of the North Sea oil and gas industry.

The North sea will be at the heart of Britain’s energy future. For decades its workers, business and communities have helped to power our country and our world, and they will do so for decades to come. The oil and gas industry has lost around a third of its entire workforce in the last decade as oil and gas production has declined. A plan is now needed. That is why in March we consulted on a framework for building a world-leading offshore clean energy industry in the North sea, alongside managing existing oil and gas fields for their lifespan. We will respond to that consultation in the coming weeks.

Alongside that, we published our clean energy jobs plan, which sets out that over 400,000 more good jobs are to be created across the UK, including 40,000 in Scotland, by the end of the decade. That is facilitated thanks to record investments in clean energy as well as over £50 billion of private investment since July 2024 thanks to the certainty our plans have created.

Turning to today’s news, colleagues will be aware that Petrofac Ltd has for some time been working on a restructure relating to its global portfolio. The restructuring plan failed, following the unexpected termination of a contract by TenneT—a Dutch transmission company. At 7 am today, holding company Petrofac Ltd announced that it will be entering administration. While that is obviously disappointing for the company, it is the product of long-standing issues with its global business.

Contrary to misleading reports today, the UK arm of Petrofac has not entered administration and is continuing to operate as normal—as an in-demand business with a highly skilled workforce and many successful contracts. Indeed, only last month Petrofac’s UK arm extended two significant contracts, demonstrating that the business has a viable future. Today’s announcement covers only the top-level holding company Petrofac Ltd, which has no employees. The Petrofac group has faced long-standing challenges, including a high-profile £77 million financial penalty imposed in 2021 following a Serious Fraud Office investigation into bribery.

We understand that there is reason to be optimistic about a commercial resolution that includes the UK arm. The Government have been, and will remain, in close contact with the company. I repeat this to the House: the UK business has not entered administration. It is successful and growing, and it will continue to operate as normal.

Another week and yet another hammer blow to our North sea oil and gas industry, another gut punch to energy workers and another blow to our energy security. Whatever the Minister says today, the blame lies squarely with this Labour Government. [Interruption.] They do not like to hear it, but it is true.

Today, the energy giant Petrofac has entered administration, casting doubt over the future of its 2,000 employees in Scotland—as its global headquarters is in Aberdeen—and the countless more who are supported indirectly through the supply chain. As the Minister said, this company has had issues for many years, but the hostile environment in the UK continental shelf created by the Government has made operating here nigh on impossible for far too many companies.

Our offshore energy industry has seen thousands of redundancies since the 2024 general election. Harbour Energy completed a new round of redundancies just last month and, with depressing regularity, we hear of more job losses in the North sea. Whether at Harbour Energy, Apache, Hunting or Petrofac, each job lost means uncertainty for a family, a mortgage jeopardised, investment fleeing our communities and our world-class supply chains and skilled workforce pushed towards extinction.

How many more will it take for the Secretary of State to change course? These are political choices. This is a manufactured decline. As a direct result of the hostile trading environment, the “closed for business” sign is hanging over the UK continental shelf. From the energy profits levy extension increase to the ban on new licences and the refusal to defend the Government’s decision on Rosebank and Jackdaw, the odds are stacked against the North sea industry, damaging the business environment, threatening investment, harming our economy and undermining our energy security. These are political choices that have resulted in job losses.

On Petrofac, the hon. Gentleman should be careful with his tone. To come here and try to undermine efforts to find a buyer for the UK arm and to talk down a business, which, as I just outlined, is a successful and growing business in the North sea, is deeply irresponsible. There have been long-standing issues at the company; he of all people should be well aware of that, given his previous role as a Minister in the Department for Energy Security and Net Zero. All of us across the House have a responsibility to support the company at the moment, not to undermine it, and to send a positive message to those workers, the suppliers and the customers that the UK arm is continuing to operate as normal. All the signs are that there is a viable long-term future for the company, but that will not happen if we have comments like those made by the hon. Gentleman undermining that business.

On the wider question of the North sea, the hon. Gentleman should know as well as anyone that we lost over a third of the jobs in the North sea during the Conservative party’s time in government. He wants to pretend that the transition arrived in July 2024, but he was in government when those jobs were going, and the Conservatives failed time and again to come up with any credible plan for managing the future of the North sea. We will not do that. We will come up with a plan. That is why we are building the industries of the future on hydrogen, on carbon capture, on offshore wind and on the supply chains—the very investments that he and Conservative Members turn their backs against time and again. They are turning their backs on the future of the energy story in the North sea as they are more interested in exploiting problems than solving them. Time and again, they have learned no lessons from their time in government, when they left these workers without a credible plan. We will not do the same again.

Will my hon. Friend outline to the House how the Government are delivering the clean energy jobs plan, which will see 40,000 new jobs in the clean energy industries in Scotland by 2030? I am sure that move will be welcomed around the Chamber. Will he advise us what support will be given to that plan by the Scottish Government?

My hon. Friend makes an important point about building up the industries of the future. I have said on a number of occasions that we should rightly be proud of six decades of oil and gas in the north-east of Scotland, and we should be proud of the work that that workforce has achieved, but we should also recognise that we have been in transition for a long time. Building up the jobs of the future in carbon capture, hydrogen, offshore wind and supply chains is how we ensure a long-term, viable, sustainable future in the north-east—alongside oil and gas for many decades to come.

The particular work that the Scottish Government need to do in this space is about improving the skills offer so that more of Scotland’s young people can take up the 40,000 jobs we will create over the coming years. That is a huge opportunity for Scotland’s young people, but only if we improve Scotland’s education system.

I call the Liberal Democrat spokesperson.

This is worrying news. Petrofac is one of the North sea’s largest offshore contractors, but it is entering administration today after years of financial difficulty. While I cannot share the desire of the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) to ditch the Climate Change Act 2008, I do share his concern for those 2,000 jobs in Scotland and those workers who face uncertainty about their future, so the Secretary of State must act swiftly to find a sustainable path forward, hopefully secure a buyer and safeguard those skilled jobs.

This underlines why the Liberal Democrats have called for an independent just transition commission, putting oil and gas workers and local communities front and centre. It was good to see the much-awaited publication of the Government’s clean energy jobs plan last week. However, we know that job creation is not happening fast enough to keep up with job losses in the North sea, so can the Secretary of State and the Minister confirm what will be done to fill that gap in the meantime—in the short term—and to deliver a genuinely just transition that keeps those skilled workers powering Britain’s clean energy future?

First, can I just say what a contrast it is when someone rightly responds to this concerning issue in a serious way and does not talk down the industry? This is where the House should stand taller and recognise that that company is doing good work and that there are 2,000 workers out in the North sea right now carrying out their duties. We want to ensure that there is a viable future for the company, and we are doing everything that we can in that space. All the signs are that it is a growing, successful business, and we should recognise that and talk it up, not talk it down, as the Conservative party seems hellbent on doing.

On the hon. Lady’s wider point, she is right to say that the future of clean energy involves tens of thousands of jobs across Scotland and hundreds of thousands across the UK, but that we need to ramp those jobs up as quickly as possible and ensure that people can achieve those jobs. We are doing what we can around looking at the skills framework, but we also ensuring that, through the investments we are making through Great British Energy, those jobs come forward much faster and that people are supported to move from jobs in oil and gas into jobs that have a real correlation in skills. We are picking this work up after the failure of the previous Government to have any plan. We are moving as fast as we can, and we will see more on that North sea plan in the coming weeks.

I have to say that this is a very underpowered urgent question. It is similar to a two-stroke engine attached to a rowing boat—[Interruption.]

Order. When I decide on an urgent question, I do not need to be questioned about how urgent it is, or whether it is like a two-stroke engine or a 50 cc—actually, some of us think it might be a three litre.

I was, of course, referring to the shadow Minister, the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie), who knows full well that he has missed the story here. Petrofac went into administration because the Dutch Government cut a contract for offshore wind farm developments. I dare say that that raises concerns about the viability for finance and the supply chain for the offshore wind farm industry, but as the Minister has pointed out, and as the shadow Minister well knows, Petrofac is successful in the UK. It has 2,000 jobs in the UK and it has contracts in the UK, so we need less scaremongering from this underpowered Opposition and more assurance from the Minister that he will look after those jobs.

I will just reflect on something that my hon. Friend said. This is a global company, and it has not had its troubles to seek for some time. It was subject to an investigation back in 2017, and it has gone through a number of restructuring routes since then. Ultimately, that process came to an end when it lost a significant contract from TenneT, one of the Dutch transmission operators. This is a company that has faced global headwinds for some time, but I repeat to the House that the UK business has a viable long-term future. It is already growing, it is successful, and we have a responsibility across this House to talk up British businesses and the workers in those jobs, not to talk them down.

May I convey in the strongest possible terms to the junior Minister the anger and anxiety that is felt by my constituents in Aberdeen? Right now they are providing energy security to each and every one of us on these isles, as well as revenue to his Treasury, yet their only reward, and the only certainty they seem to have on this Government’s watch, is that of looming job losses. May I ask—[Interruption.] He shakes his head. May I ask him to come to Aberdeen and explain to my constituents when he is going to listen to the trade unions, the academics, the workers and the industry and protect that industry, not only for our energy security but for Scotland’s economy?

I am in Aberdeen regularly and do meet constituents of the right hon. Member who work in renewables, carbon capture and hydrogen as well as in oil and gas. It is his constituents who will benefit from the investments that Great British Energy will make, for example, which he failed to vote for, and who tell me that after a long period of having no credible plan—[Interruption.] He can shout me down all he wants; he asked a question—

Order. I brought the right hon. Member for Aberdeen South (Stephen Flynn) in early because I thought that was right for his constituents and because he had applied for an UQ, but I do expect a little respect, even if he does not like the answer.