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Thousands of North Sea oil jobs at risk as platform builder fails to win contract Thousands of North Sea oil jobs at risk as platform builder fails to win contract
(1 day later)
Thousands of jobs are at risk after one of Britain’s leading offshore oil platform builders failed to make the shortlist for one of the last major contracts up for grabs in the North Sea.Thousands of jobs are at risk after one of Britain’s leading offshore oil platform builders failed to make the shortlist for one of the last major contracts up for grabs in the North Sea.
The decision by the US oil group Chevron to exclude the Tyneside-based OGN from its list of prequalifying contractors has rekindled a simmering row between the government and Labour MPs representing the north-east.The decision by the US oil group Chevron to exclude the Tyneside-based OGN from its list of prequalifying contractors has rekindled a simmering row between the government and Labour MPs representing the north-east.
Foreign companies appear to be in pole position to win the contract for the Captain field despite OGN’s long record of success. The setback comes at a time when work is drying up because of plunging oil prices. Even with a jump to around $50 a barrel on Friday, the price is still more than 50% down on last summer.Foreign companies appear to be in pole position to win the contract for the Captain field despite OGN’s long record of success. The setback comes at a time when work is drying up because of plunging oil prices. Even with a jump to around $50 a barrel on Friday, the price is still more than 50% down on last summer.
“If we lose this contract I am petrified that it could lead to closure and that is the end. Once a business closes then it is rare for it to reopen,” said Mary Glendin, MP for North Tyneside. “If we lose this contract I am petrified that it could lead to closure and that is the end. Once a business closes then it is rare for it to reopen,” said Mary Glindon, MP for North Tyneside.
Related: North Sea oil and gas industry suffers worst losses in decadesRelated: North Sea oil and gas industry suffers worst losses in decades
“Skilled workers can maybe find employment in Africa or elsewhere, as we saw with the closure of shipyards, but it is often overlooked that this is bad for families and the social fabric of the north-east when men are forced to work away from home,” she said.“Skilled workers can maybe find employment in Africa or elsewhere, as we saw with the closure of shipyards, but it is often overlooked that this is bad for families and the social fabric of the north-east when men are forced to work away from home,” she said.
Glendin and other local MPs have repeatedly complained to Amber Rudd, the energy and climate change secretary, and other ministers that British suppliers are not being sufficiently supported. They are planning further appeals to government. Glindon and other local MPs have repeatedly complained to Amber Rudd, the energy and climate change secretary, and other ministers that British suppliers are not being sufficiently supported. They are planning further appeals to government.
Rudd’s department declined to comment, but newly created regulator the Oil and Gas Authority said its job was to ensure a level playing field rather than tilt contracts towards the UK.Rudd’s department declined to comment, but newly created regulator the Oil and Gas Authority said its job was to ensure a level playing field rather than tilt contracts towards the UK.
The regulator did not comment specifically on the Chevron shortlist, but a spokesman said: “When considering proposed field development plans we expect operators and licensees to adopt contracting strategies that deliver the best overall value.”The regulator did not comment specifically on the Chevron shortlist, but a spokesman said: “When considering proposed field development plans we expect operators and licensees to adopt contracting strategies that deliver the best overall value.”
The energy industry is going through a worldwide crisis because of an oil glut caused by over-production and lower than anticipated demand. Shell, BP and others have axed hundreds of jobs in Aberdeen. Denmark’s Maersk Oil became the latest operator to announce cuts last week, putting 200 jobs at risk when it said it would seek permission to shut down its Janice platform in the North Sea early next year.The energy industry is going through a worldwide crisis because of an oil glut caused by over-production and lower than anticipated demand. Shell, BP and others have axed hundreds of jobs in Aberdeen. Denmark’s Maersk Oil became the latest operator to announce cuts last week, putting 200 jobs at risk when it said it would seek permission to shut down its Janice platform in the North Sea early next year.
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OGN, which is owned by the Russian entrepreneur and Conservative party donor Alexander Temerko, believes it is unfair that North Sea oil companies win UK tax breaks to develop new fields without then having to use local suppliers.OGN, which is owned by the Russian entrepreneur and Conservative party donor Alexander Temerko, believes it is unfair that North Sea oil companies win UK tax breaks to develop new fields without then having to use local suppliers.
Dennis Clark, OGN’s chairman, said that as many as 3,000 jobs at the firm’s Wallsend yard and along the wider supply chain were at risk because there was no major piece of work on the horizon for at least three years.Dennis Clark, OGN’s chairman, said that as many as 3,000 jobs at the firm’s Wallsend yard and along the wider supply chain were at risk because there was no major piece of work on the horizon for at least three years.
“We run out of work in October and yet we have been excluded from the final bidding for the Chevron work, despite having recently completed a recent project on time for Chevron’s Alder project.”“We run out of work in October and yet we have been excluded from the final bidding for the Chevron work, despite having recently completed a recent project on time for Chevron’s Alder project.”
OGN recently announced 200 redundancies after failing to win a Maersk Oil contract to build an installation for the £2bn Culzean gas project that went to competitors based in the Netherlands and Singapore.OGN recently announced 200 redundancies after failing to win a Maersk Oil contract to build an installation for the £2bn Culzean gas project that went to competitors based in the Netherlands and Singapore.
The Chevron contract, which OGN estimates to be worth around £200m and enough to guarantee work for as many as 2,000 people, looks likely to go to fabricators based in the Netherlands, Spain or Italy.The Chevron contract, which OGN estimates to be worth around £200m and enough to guarantee work for as many as 2,000 people, looks likely to go to fabricators based in the Netherlands, Spain or Italy.
One British company, Babcock at Rosyth, has prequalified for the Captain work, , but it has much more experience in maritime defence than offshore oil and gas. The Dutch company is believed to be Heerema, which also has a yard in Hartlepool.One British company, Babcock at Rosyth, has prequalified for the Captain work, , but it has much more experience in maritime defence than offshore oil and gas. The Dutch company is believed to be Heerema, which also has a yard in Hartlepool.
Chevron declined to comment on which companies were on the Captain shortlist, but said it had chosen four in a rigorous selection process.Chevron declined to comment on which companies were on the Captain shortlist, but said it had chosen four in a rigorous selection process.
“Over the last five years approximately 80% of Chevron Upstream Europe spending has been with UK suppliers,” a spokeswoman said.“Over the last five years approximately 80% of Chevron Upstream Europe spending has been with UK suppliers,” a spokeswoman said.
At one stage there were as many as 40 yards producing platforms, jackets and other pieces of equipment for the UK’s North Sea oil industry, but OGN is one of only a tiny number still in business.At one stage there were as many as 40 yards producing platforms, jackets and other pieces of equipment for the UK’s North Sea oil industry, but OGN is one of only a tiny number still in business.