Good evening ladies and gentlemen.
Today has seen my first official engagements in Aberdeen as Secretary of State for Scotland.
It has been a busy and interesting day, and I am delighted to round it off at this function this evening.
When David Cairns was Minister of State at the Scotland Office he took a very close interest in your industry and was highly regarded by it and seen as a supporter and friend. I want to begin this evening by assuring you that I intend to follow on in this tradition
Next year will mark 40 years since oil was discovered in the North Sea, and what an amazing 40 years it has been. A time of pushing the boundaries of innovation and ingenuity and indeed courage.
The courage of small companies to take bigger steps into a new industry and the courage of individuals to work in such harsh environments.
There is no doubt that the offshore oil and gas industry is one of Scotland¿s great success stories.
But like any industry so much relies on the people it employs and we're here tonight to celebrate the best of that talent.
The Government is intent on maximising opportunities and the recently announced 25th Licensing Round continues the pace with a record 171 licences offered to 100 companies. These licenses will drive exploration which in turn will lead to more delivery. I'm pleased that DECC in partnership with OPITO are taking an early opportunity to raise the profile of the oil industry there by engaging with secondary schools on the islands to publicise career opportunities which exist in the offshore sector.
We are fortunate also in having the effective industry/Government forum PILOT of which I am now a member. The meeting scheduled for tomorrow has been cancelled (not for my benefit I hasten to add!) but I will be taking the opportunity instead to visit a couple of companies as part of the process of getting to know the industry. So it will not be a wasted day.
I am sure that all of you here know that the Government realises the scale of the challenges that will need to be overcome if the North Sea that we all want to see in the future is to be a reality. PILOT has been given a higher profile in order to ensure that we tackle these challenges and ensure full recovery of our hydrocarbon reserves.
I recall from my own trip offshore to the Elgin field the huge importance the industry place on health and safety - and rightly so. This year's 20th anniversary of the Piper Alpha disaster was a stark reminder of the dangers of this industry and something that none of us want to see repeated - ever.
The industry's commitment to spend £1.25 to £1.5 billion in each of the next three years to replace and refurbish safety critical equipment and improve management systems is to be commended and should remain a high priority for the industry.
I'm also delighted to hear that OPITO - the industry's own Oil and Gas Academy - is going from strength to strength, since it was launched in December last year. Set up in response to the government's concept of employers taking ownership of the skills and training required in their own sectors - OPITO is a great example of stakeholders working together to ensure that we have the workforce to deliver the energy that we will all need for tomorrow.
We all recognise the role the offshore sector plays in our economy and the world-class skills it brings to the table. Those are in high demand across the world and it is important the industry has flexibility and a fair playing field when it comes to recruitment and retention, both from home and abroad.
I'm also pleased to hear about the work being done on a collective relationship with Higher Education.
I look forward to hearing about the results of the 12 month action plan that is being created and perhaps see a best practice developed for other industries to follow. We all want to see the best education for our young people and for them to end up in fulfilling and satisfying jobs - so easing that transition from education to full time employment is in everyone's best interests.
The UK Government is keen to support the skills agenda and today I have announced an initiative to identify skills shortages in Scotland's oil and gas industry. I have asked the Scottish Council Development and Industry, working with UK Oil and Gas, to let me know where skill gaps exist in the sector and report back to me with recommendations for action.
I am glad that OPITO has also welcomed this move. It comes in response to a growing recognition that the oil and gas industry in Scotland faces major employment challenges in the global market, including maintaining an indigenous skills base and attracting skilled overseas workers.
The oil and gas industry has been and remains an important one to the UK. I want to make it very clear that the UK government sees this as a UK industry and is determined that it should remain operating in a UK and indeed international context.
We believe that a UK-wide strategy is the most effective way to deliver our energy policy objectives.
International engagement, crucial to this industry, is best undertaken at a UK level. Our domestic goals require major investment in energy infrastructure, much of which investment is likely to be sourced internationally.
A clear UK-wide legislative framework is considerably more attractive to potential investors than different regimes in the different nations within the UK. I believe that is what you as an industry wants to hear and as such and I can assure you that the UK Government will not deviate from that view.
Given the massive global grab for precious energy resources that will be a feature of this centaury, Britain's energy security is becoming a central component of national security.
The UK's home grown energy resources are absolutely critical in an era where geopolitics of energy dominate the agenda.
The twin challenges of climate change and security of supply face the UK Government today just as they face every government around the world.
There are short term issues to deal with of course but it is fair to say that many of the decisions we make now will have far reaching implications for the next 50 years at least.
This industry will be making decisions in the face of geopolitical uncertainty for many years and I am sure it will continue to rise to the challenge.
Before I close I would also like to say a few words about the credit crunch.
As with the rest of the economy, difficulties in the credit market will raise challenges in maintaining investment levels in the North Sea. But the UKCS has been resilient in the past and has risen to many challenges both economic and technical in the past. We believe that it will continue to face these challenges
We are all in agreement on the fact that the case for maximising UKCS production remains exceptionally strong. Last year's energy white paper was quite clear that the oil and gas industry has an important role to play in supporting its objectives of ensuring that we have a secure and sustainable energy supply for the future.
Despite the recent fall in prices, there is a strong case for urgent action to improve the functioning of the global oil market. We must increase transparency in the oil market, tackle barriers to increased investment in new oil supplies and non-carbon energy, and continue to take steps to improve energy efficiency. That is why the Prime Minister has called the Energy Ministers Meeting in London on 19 December.
Ladies and Gentlemen thank you - I believe it is time to end
Date: 13 Nov 2008