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Aberdeen: once-rich oil city now relying on food banks Aberdeen: once-rich oil city now relying on food banks
(7 months later)
Former oil workers are queuing up to use food banks in Aberdeen, formerly one of the UK’s most prosperous cities, as 12-year lows in the price of crude this week propel the North Sea industry deeper into crisis.Former oil workers are queuing up to use food banks in Aberdeen, formerly one of the UK’s most prosperous cities, as 12-year lows in the price of crude this week propel the North Sea industry deeper into crisis.
Hundreds of staff are being laid off every week as producers, drillers and service companies slash their spending in moves which are hurting local businesses, from estate agents to hoteliers and taxi drivers.Hundreds of staff are being laid off every week as producers, drillers and service companies slash their spending in moves which are hurting local businesses, from estate agents to hoteliers and taxi drivers.
Those claiming out of works benefits in the north-east of Scotland rocketed by 72% in December and the total number of UK oil-related jobs lost could already be 70,000, with some predicting 200,000 out of 400,000 could eventually go.Those claiming out of works benefits in the north-east of Scotland rocketed by 72% in December and the total number of UK oil-related jobs lost could already be 70,000, with some predicting 200,000 out of 400,000 could eventually go.
Related: Oil services giant Schlumberger axes 10,000 jobs after $1bn loss
Dave Simmers, who leads the Aberdeen Food Banks partnership, said demand for free access had soared in a city which is so dependent on oil and gas.Dave Simmers, who leads the Aberdeen Food Banks partnership, said demand for free access had soared in a city which is so dependent on oil and gas.
“The number of food parcels delivered in 2015 was double the number in 2014 and we are seeing increases all the time. People can be used to earning good money in the oil industry but when the pay checks stop the problems start,” Simmers added.“The number of food parcels delivered in 2015 was double the number in 2014 and we are seeing increases all the time. People can be used to earning good money in the oil industry but when the pay checks stop the problems start,” Simmers added.
“We had a man draw up in a Porsche outside and come in here. His house was going to be repossessed and the car was on credit and going to be handed back. Whoever you are, you can be two or three wage slips away from a hole.”“We had a man draw up in a Porsche outside and come in here. His house was going to be repossessed and the car was on credit and going to be handed back. Whoever you are, you can be two or three wage slips away from a hole.”
Simmers said the social enterprise he runs, Community Food Initiatives North East, lead partner in the Aberdeen Food Banks partnership, has also lost a huge amount of revenue because it used to supply much more paid fruit to the industry – including to crews on offshore vessels anchored in the harbour just yards away.Simmers said the social enterprise he runs, Community Food Initiatives North East, lead partner in the Aberdeen Food Banks partnership, has also lost a huge amount of revenue because it used to supply much more paid fruit to the industry – including to crews on offshore vessels anchored in the harbour just yards away.
Jake Molloy, a former oil worker and now Scottish regional officer for the Rail, Maritime, Transport (RMT) union said he has personally been made aware of more than 250 job losses in the last four days alone.Jake Molloy, a former oil worker and now Scottish regional officer for the Rail, Maritime, Transport (RMT) union said he has personally been made aware of more than 250 job losses in the last four days alone.
Related: Shell warns of 50% cut in profits amid plunging oil price
“Every day I see HR1s [statutory redundancy notices] like these,” he said, shuffling sheets of paper and reading out: “150 at Petrofac, 90 at Sparrows, 70 at Gulfmark, 60 at ConocoPhillips ... ”“Every day I see HR1s [statutory redundancy notices] like these,” he said, shuffling sheets of paper and reading out: “150 at Petrofac, 90 at Sparrows, 70 at Gulfmark, 60 at ConocoPhillips ... ”
Molloy said that along with those actually losing their livelihoods, almost everyone is having their terms and conditions changed. “Offshore workers are being made to work an extra 320 hours a year for no extra pay, pension arrangements are being slashed and travel allowances removed in some cases.”Molloy said that along with those actually losing their livelihoods, almost everyone is having their terms and conditions changed. “Offshore workers are being made to work an extra 320 hours a year for no extra pay, pension arrangements are being slashed and travel allowances removed in some cases.”
His worst nightmare is that there is a growing backlog of maintenance work as oil companies cut spending, which could affect safety. He is also worried that decommissioning of platforms will hasten an early end to some fields.His worst nightmare is that there is a growing backlog of maintenance work as oil companies cut spending, which could affect safety. He is also worried that decommissioning of platforms will hasten an early end to some fields.
Britain is one of the highest cost producers of oil in the world at around $60(£42) a barrel, not a good situation when the global price is about half that.Britain is one of the highest cost producers of oil in the world at around $60(£42) a barrel, not a good situation when the global price is about half that.
Another threat comes from Saudi Arabia and Iran – two of the biggest and cheapest producers, formerly largely closed to outsiders – making clear they want to attract new foreign investors away from places such as the North Sea.Another threat comes from Saudi Arabia and Iran – two of the biggest and cheapest producers, formerly largely closed to outsiders – making clear they want to attract new foreign investors away from places such as the North Sea.
Related: Oil price woes deepen as Iran vows to add 500,000 barrels a day
Colin Welsh, chief executive of oil financiers Simmons & Co, said there is no doubt the Aberdeen industry is suffering very badly and he thinks half of those directly or indirectly employed in Britain due to the North Sea could eventually lose their jobs.Colin Welsh, chief executive of oil financiers Simmons & Co, said there is no doubt the Aberdeen industry is suffering very badly and he thinks half of those directly or indirectly employed in Britain due to the North Sea could eventually lose their jobs.
“2016 is going to be carnage. What looked like sensible levels of debt for companies a year or 18 months ago now look ridiculous. But when people start to worry about whether the industry will ever return again [like now] then thats a signal to buy,” he argued.“2016 is going to be carnage. What looked like sensible levels of debt for companies a year or 18 months ago now look ridiculous. But when people start to worry about whether the industry will ever return again [like now] then thats a signal to buy,” he argued.
Welsh said he is confident the oil industry will bounce back with a combination of higher crude prices, cutting its own costs and the right level and type of regulation. “I think we could see the number of people working in the industry fall from 400,000 as low as 200,000 but eventually go back up to say 300,000.”Welsh said he is confident the oil industry will bounce back with a combination of higher crude prices, cutting its own costs and the right level and type of regulation. “I think we could see the number of people working in the industry fall from 400,000 as low as 200,000 but eventually go back up to say 300,000.”
Also confident is Sir Ian Wood, the billionaire former boss of the oil services firm, the Wood Group, who wrote a report for government on how to transform the fortunes of the North Sea industry. “I don’t at all [believe this is the end]. By 2020 I think we will back to really busy,” he said. “[Britain] may have produced 44bn barrels of oil but I said in my report we could produce a further 15 to 16bn. I still believe that.Also confident is Sir Ian Wood, the billionaire former boss of the oil services firm, the Wood Group, who wrote a report for government on how to transform the fortunes of the North Sea industry. “I don’t at all [believe this is the end]. By 2020 I think we will back to really busy,” he said. “[Britain] may have produced 44bn barrels of oil but I said in my report we could produce a further 15 to 16bn. I still believe that.
“But we need clever thinking to encourage exploration and new developments. This is not just about tax, although I do think the government will do something on tax ... It is about technological innovation and companies cooperating together.“But we need clever thinking to encourage exploration and new developments. This is not just about tax, although I do think the government will do something on tax ... It is about technological innovation and companies cooperating together.
“This is a strong industry with very clever people in it that that will not lie down. We will work our way through this,” he said.“This is a strong industry with very clever people in it that that will not lie down. We will work our way through this,” he said.
There is talk of a city deal for Aberdeen and David Cameron this week promised to set up an oil industry support group, which was welcomed by Oil & Gas UK, the industry trade body.There is talk of a city deal for Aberdeen and David Cameron this week promised to set up an oil industry support group, which was welcomed by Oil & Gas UK, the industry trade body.
The oil industry has ridden out previous slumps but one unique issue this time round is the growth of public support for keeping fossil fuels in the ground in the wake of the recent Paris climate change talks.The oil industry has ridden out previous slumps but one unique issue this time round is the growth of public support for keeping fossil fuels in the ground in the wake of the recent Paris climate change talks.
The Scottish Green party said this week it was time for a “transition away from oil and gas to secure future jobs and energy supply”, with future investment being targeted on renewables and other low carbon technologies.The Scottish Green party said this week it was time for a “transition away from oil and gas to secure future jobs and energy supply”, with future investment being targeted on renewables and other low carbon technologies.
Wood said it is nonsensical to imagine Britain can survive 100% on renewables but accepts it is time for Aberdeen to diversify its economy more into sectors such as life sciences, food production and tourism .Wood said it is nonsensical to imagine Britain can survive 100% on renewables but accepts it is time for Aberdeen to diversify its economy more into sectors such as life sciences, food production and tourism .
So could Aberdeen become a heritage centre for oil in the way that there are mining museums in Yorkshire? He looks horrified: “Maybe one day but I am not ready for that yet.”So could Aberdeen become a heritage centre for oil in the way that there are mining museums in Yorkshire? He looks horrified: “Maybe one day but I am not ready for that yet.”