SNP in talks over public buyouts of North Sea platforms

The Scottish Government is ready to look into the prospect of public buyouts of vital North Sea platforms and pipelines to support the industry through the current slump.

By The Newsroom Thursday, 23rd February 2017, 10:17 pm Updated Tuesday, 28th February 2017, 12:45 pm

Public buyouts of vital North Sea platforms and pipelines could support the industry through the current slump. Picture: PA

It comes amid growing concerns that “premature decommissioning” of key facilities could kill off the fragile recovery in the industry as the global oil price continues to stagnate.

Talks have already taken place with potential “financial partners” about the prospect of intervention, energy minister Paul Wheelhouse told MSPs yesterday.

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Labour’s Lewis MacDonald called on Scottish ministers to consider a public buy-out of vital infrastructure such as pipelines amid fears these could be lost as firms step up their decommissioning plans.

Mr Wheelhouse told MSPs: “I am certainly aware of calls of that nature, and we have had discussions with others – financial partners and investors – who are interested in that area.

“I know that the UK government has also looked at the potential for public sector intervention in that respect as well. We are open to ideas.”

He added that if Labour or other parties come forward with proposals, the government would “look at them with an open mind”.

The minister accepted there is a need to “protect vital pieces of infrastructure” after about 10 per cent of assets were sold off last year by North Sea firms.

But he urged the UK government ministers to implement a “loan guarantee” which may negate the need for the private sector to intervene. Ten new fields in the North Sea became operational last year, Mr Wheelhouse told MSPs, with rising levels of production expected to continue in the coming years. But there were only 15 new exploration wells last year, and that is expected to remain “static” in the years ahead.

The kind of infrastructure that may need investment includes networks of subsea facilities connected by pipelines and flow lines.

Mr Macdonald said: “The biggest risk to future economic activity is that a key piece of that infrastructure is shut down because it no longer makes money. Premature decommissioning of infrastructure can block oil and gas production upstream.”

But Tory MSP Liam Kerr rejected calls for ministers to step in.