Britain's old oil capital risks being abandoned by Labour 'sleepwalkers', business chief warns

For decades, it was Europe’s capital of oil. With unrivalled knowledge on operating in some of the harshest conditions on the planet, the workers of Aberdeen helped write the textbook on offshore exploration.

Yet, when the head of the city’s Chamber of Commerce was invited to address a key Norwegian energy conference, his brief couldn’t have been further from this proud history.

Chief executive Russell Borthwick said: “I got a one-line email, saying, 'Your speaker topic is how do we avoid ending up like Aberdeen?’"

“I replied, 'I hope you're giving me about half a day to speak, then'."

He tells the story as an anecdote, but his message is deadly serious. He fears that the Labour Government's stance on the oil and gas sector is threatening not just energy security but people’s futures.

It could also damage the green transition itself. “These are issues of critical national security, of national economy,” Mr Borthwick said.

“We are seriously risking what all politicians, of all parties, say will never be allowed to happen again – the abandonment of energy communities. We seem to be sleepwalking into a similar scenario.”

The problem isn’t Net Zero itself, Mr Borthwick says, but rather the chosen route to get there.

The Government has closed the North Sea to future drilling with its King’s Speech; no more licences will be issued, fulfilling a manifesto pledge to “show climate leadership”.

Operators already face heavy taxes – a 78 per cent levy on their profits. This has meant a slowdown in the investment needed to keep operations running and scant prospect of improvement on the horizon.

But Mr Borthwick questions whether this ‘either/or‘ approach, in which oil and renewables are presented as a binary choice, is wise – or even reflects the reality of our own climate predictions.

He points to estimates that the country will need around 15 billion barrels of oil between now and 2050. Much will need to be imported.

However, with the proper investment in place, the North Sea could provide around half, experts say.

The signals from Westminster are hardly inspiring confidence in investors. Offshore expertise – which is also vital for the renewables market and the green transition – is moving abroad.

In the current climate, experts warn, it may be hard to lure back, meaning the skills needed to produce the oil are lost even if the will is there. The impact will be felt nationally, says Mr Borthwick, but the Granite City stands as a barometer.

And it’s not just oil that’s suffering. His Aberdeen & Grampian Chamber of Commerce represents around 1,350 companies, with less than a third involved in energy.

In previous oil slumps, the wider economy has proven resilient. But the current picture was different, he said, with local businesses feeling the impact.

“These are bakers, butchers, candlestick makers, retailers, transport providers, hotels, restaurants, lawyers, accountants – people whose livelihoods depend on a confident and buoyant energy sector.

“That's a question of confidence and investment. There are fewer boats in town, there are fewer people visiting town to do work.

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“We hear from architects, for example, about kitchen extension plans on ice because people aren't sure of their job certainty.

"The flow-through of the lack of activity and lack of future confidence is having an impact way, way beyond oil and gas. We're about trying to stop this becoming a post-industrial place.”

He is not alone in his concern. Across town, the Aberdeen Cyrenians has been providing support for the city’s most vulnerable for nearly 60 years.

Since being started as a soup kitchen by students, the charity has helped tens of thousands get back on their feet.

However, from last week, it has been helping a new type of clientele – jobless offshore workers whose fortunes have changed as the oil boom fades.

“The average person is probably in their late 40s or early 50s,” says CEO Donna Hutchison, who opened the charity’s NorthBridge hub earlier this month.

“They are senior professionals who have worked for an operator or a large multinational.

“They are highly qualified, perhaps with a master’s degree. They have been made redundant and have maybe struggled to get work. Many have never had to do a CV and they’ve certainly never had to use LinkedIn.”

Like Mr Borthwick, she recalls the bedlam unleashed by the closure of the Scottish coal industry and the collapse of England’s industrial north.

“We’ve had the playbook," she said. “We know how this will go. My concern is where is the safety net around people right now, as opposed to 12 months or five years from now?”

Ed Miliband's Department for Energy Security and Net Zero insists that a flood of well-paid green jobs will arrive to pick up the slack.

Many of the skills acquired from working in the North Sea are in high demand in the renewables sector; one report into the North Sea transition found 90 per cent the UK’s oil and gas workforce have medium to high skills transferability.

The Labour Government plans to establish the North Sea Jobs Service – an employment programme “offering tailored end-to-end support” for workers wanting to move to growing industries, including not just clean energy but defence and advanced manufacturing.

A £20million fund is available to help retrain oil workers. Mr Borthwick agrees that a successful transition will see offshore workers, and the supply chains that flow from them, play a key part in the green revolution

However, statistics suggest that the oil sector is currently disappearing more quickly than new jobs can keep pace. Mr Borthwick says it’s time to "reset the Sat Nav” on the transition path and also to recognise that, as things stand, there is space for both oil and renewables.

“The whole debate's been positioned as if it’s the case that if you believe in Net Zero, you can't believe in this [the oil and gas sector],” he said. “It's got so ridiculously polarised.

"The transition is not going from where you are today to where you wish you could be in a single step. Let's not take a giant leap off the cliff hoping we can reach the other side. The reality is there's a big chasm that we're falling into, because it's quite a big gap to jump right now.”

He likened it to a car journey where unforeseen obstacles demanded a different route and Net Zero would still be the destination.

He added: “The endpoint in the SatNav is the correct endpoint, but the Satnav just needs to readjust.

"But, because there are some road closures and some blockages, we should just set a different path. Without losing the ambition of the endpoint, let's just take that reroute to save jobs, to grow the economy, and to create energy security.”

He points to the case of the Jackdaw gas field as a prime example of an opportunity being missed. Like Rosebank – Britain's largest untapped oil field – it has a licence, meaning it should be unaffected by the ban.

But work has stopped at both fields pending legal challenges on climate grounds. The final say has fallen to Mr Miliband.

Activists have repeatedly called for the fields to be abandoned. Mr Miliband himself has described Rosebank as “climate vandalism”.

However, Mr Borthwick said: “Jackdaw, by this Christmas, could be producing six per cent of our total domestic gas. That gas is four times cleaner. It has a lower carbon footprint than imported LNG.

“This is not the same as saying, ‘we don't believe in the future’, and it's not the same as saying, ‘drill, baby, drill’. But it’s saying it will help keep the lights on, keep people in work, and grow the economy, which will actually accelerate the ambition that everybody has to get to a cleaner energy system.”

Renewed confidence in the entire offshore market – including oil, gas and renewables – would help retain the skills needed to keep the energy flowing, he says.

He points out that of the 200,000 jobs supported by the sector, under ten per cent were posts with oil majors. There is real “jeopardy” if these roles move overseas, he warned.

“We have some of the best engineering talent in the world, doing smart things in some of the most difficult offshore conditions. This has created a world-class industry over the last 50 years or so.

“These are the blue-collar workers of the 21st century. Whether they're engineers, or welders, or scaffolders, or painters, or divers, these are the guys that are doing the tough stuff to make sure we can warm up our microwave meals and keep our beer cold in the fridge.

“But the pattern we're continuing to see is this: with our supply chain today, about 60 per cent of their orderbook is still in the UK. By about 2028/29, that crosses, and within five years, it goes to about 55 per cent of that work being overseas.

“The risk is that, if we suddenly manage to get traction on a big build out of new energy projects in the UK, we'll be looking around, and there's no one to deliver the projects.

“I think that's a big jeopardy that's being missed - we simply won't have the supply chain to respond to that when we eventually get to the point where it's investable and we can move on.”

At NorthBridge, Ms Hutchison agrees that there is no lack of support for the green transition. From wind to carbon capture, Aberdeen wants to embrace the new energies. But she warns of a disquiet, that people are taking second place to “emissions calculations on a spreadsheet”.

She explained: “There’s a feeling that the city has no control or influence over it, and that there is a lack of engagement with those who are making decisions – they don't live locally.

“The whole debate has become weaponised. You will not find anybody in Aberdeen saying ‘drill baby drill’, or ‘oil and gas only’. Everybody in Aberdeen will tell you it needs to be an all-energy mix. It needs to be hydrogen, solar wind, carbon capture, or nuclear. We're all for that."

"But we cannot have one industry decelerate before the other one has accelerated. In Aberdeen, the issue isn’t public resistance to climate action – it's the lack of support as people lose work. Workers are already leaving the energy sector, but new jobs don’t yet exist at scale, and income protection is falling short.

“Stable policy is really what everybody needs. We need to remember there are human beings and households affected by this. This is not about numbers on a spreadsheet or emissions calculations.

“These are people who want to live healthy and happy lives, and provide for their families. We created NorthBridge not to oppose the transition, but because it’s being delivered without protecting those most affected.

“If ambition continues to outpace reality, the costs will keep falling on individuals and communities. That’s not a just transition, it’s unmanaged harm, and it risks eroding public trust.”

With the Labour Government currently in crisis over a potential leadership challenge, future policy may still change. Mr Borthwick reminded the administration that a different course wasn’t necessarily an admission of fault.

“I would say to government, don't view sensible and pragmatic change as being some kind of egg on the face U-turn," he said. “All you're actually demonstrating is a stewardship of the economy in the country.

“You should be bigger than that and see that we do need to keep our hospitals powered and the lights on in our schools and the goods that everyone's ordering moving around the country to get delivered to their door.

“Taking that view absolutely does not clash with your net zero clean energy system ambitions – it probably accelerates them.”

A spokesman for the Department for Energy Security and Net Zero said: “We are making sure the North Sea has a prosperous and sustainable future through our record investment, delivering the next generation of skilled jobs and growing the clean energy industries of the future.

“Our ambitious plans will make the North Sea a clean energy powerhouse and support up to 40,000 new jobs in Scotland by 2030.”