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The Herald Scotland
20 hours ago
- Business
- The Herald Scotland
Hopes of big green jobs boost for Highlands and Argyll fade
However, the projects have been cast into uncertainty after cost increases and concerns about issues such as planning consents weakened the commercial appeal of schemes that would entail hefty upfront investment. Perth based SSE has held out the prospect the Coire Glas development could store enough power for three million homes. It would work by harnessing the power generated by the flow of water between two reservoirs that SSE plans to develop by Loch Lochy. The company would use power generated by windfarms in times of low demand to pump water into the upper reservoir. When demand increases the water will be allowed to flow into the lower reservoir turning huge turbines in the process. Drax has developed a plan to double the capacity of the massive Cruachan Hollow Mountain facility in Argyll, which would involve hollowing out spaces in which it would install more turbines. READ MORE: SNP Government oil hypocrisy shocking amid Scottish jobs cull Israeli-owned firm takes control of UK's biggest gas field The companies have claimed the schemes could provide vital support for the renewables revolution by tackling the problem caused by the fact that the UK does not have enough capacity to store renewable energy or transport it to centres of high demand. But in its annual results SSE said it planned to reduce its investment budget by £3 billion, to £17.5bn, citing the challenges posed by the macro environment and planning issues. Chief executive Alistair Phillips-Davies said a range of projects including Coire Glas would be delayed as a result. Mr Phillips-Davies said the giant Berwick bank windfarm development off Scotland had also been delayed, as a long wait for the Scottish Government to provide planning consent drags on. He complained to reporters that the scheme has been on ministers' desks for about three years. The announcement by SSE came a fortnight after Drax announced that the Cruachan expansion project had been put on hold following a significant rise in costs. The statements leave huge uncertainty hanging over projects that were expected to provide a badly-needed boost to flagging hopes that Scotland will enjoy a green jobs boom. The number of jobs created has fallen well short of expectations, partly because windfarm developments require relatively few people to complete. Coire Glas and the Cruachan expansion scheme would be unusual in featuring large scale construction work. SSE has completed some preparatory work for the Coire Glas development by Loch Lochy (Image: SSE) Experts have highlighted the fact Scotland urgently needs to accelerate the pace of green job creation amid turmoil in the oil and gas sector. There are fears that firms could cut hundreds of jobs in response to the Labour Government's decision to increase the windfall tax rate in its first Budget. In a report issued today Robert Gordon University says the UK oil and gas energy workforce could shrink by approximately 400 jobs every two weeks for the next five years – the same number lost as a result of the closure of the Grangemouth refinery – unless governments take urgent action. It notes: 'Before 2027, there is likely to be limited capacity for the UK offshore renewables sector to host and accommodate the quantity of oil and gas workers becoming available on the job market.' Oil and gas industry leaders are mounting a last ditch bid to persuade chancellor Rachel Reeves to provide relief when she announces the results of her Comprehensive Spending Review on June 11. Offshore Energies UK said the Government should bring forward the date for the ending of the windfall tax to 2026 from 2030. The trade body claimed: 'Independent data from the Office of National Statistics confirms that the profits for those investing in the UK oil and gas sector have fallen to negative levels, but the tax remains - holding back vital investment across the UK's energy landscape.' READ MORE: North Sea giant eyes major expansion move as oil and gas job losses mount Just transition furore reignited as Scottish Government flounders OEUK chief executive David Whitehouse said the UK needed the output of the oil and gas industry and the support firms could provide for the development of green energy sources. 'The sector needs action now to secure jobs, boost energy security, and build for the future. That means a commitment from government to deliver a mechanism in 2026 that creates a predictable response to future price shocks,' declared Mr Whitehouse. 'This is what is needed to unlock investment in UK energy - oil, gas, renewables, hydrogen, and carbon capture.' But SSE and Drax made clear they will only proceed with big pumped hydro storage projects if tough conditions are met. SSE chief executive designate Martin Pibworth noted the company is in talks with Ofgem about the cap and floor mechanism the regulator has proposed to guarantee firms a minimum price for the output from pumped hydro storage schemes. Regarding Coire Glas, he said: 'We will only progress if we are convinced we have a solid remuneration contract with appropriate risk-adjusted returns.' Drax said: 'We will not be entering the forthcoming Cap & Floor application process while we evaluate the investment case for the [Cruachan expansion] project.' The bad news from SSE about Coire Glas and Berwick Bank will compound the disappointment caused by the company's decision to shelve plans for the Bhlaraidh windfarm extension in the Great Glen because bosses did not like the look of the 'risk-return profile'. But SSE will still spend heavily on growing its renewables generating capacity in the expectation that it will generate strong returns on investment in favoured projects. Mr Pibworth said: 'The vast majority of this growth will be delivered by the first two phases of Dogger Bank [off Yorkshire] and well-progressed onshore and battery projects.' He highlighted the value of the support the favoured projects will get under UK Government schemes such as the Contracts for Difference (CFD) programme - the costs of which are added to household energy bills. 'Crucially, these investments are underpinned by long-term government-backed contracts such as CfDs or the capacity mechanism, providing price certainty and inflation protection for the vast majority of volumes produced,' said Mr Pibworth. SSE said it championed a fair and just energy transition, as it posted a near £2bn operating for the latest year, The company said it supports 62,000 jobs in the UK and around 5,200 in Ireland. But householders who are grappling with high energy bills may wonder who will be the biggest beneficiaries of SSE's investment in renewables. The company expects to reward shareholders with inflation-busting increases in dividend payments of up to 10% for the next two years.
The Herald Scotland
27-05-2025
- Business
- The Herald Scotland
EnQuest slams windfall tax as Aberdeen oil and gas jobs lost
In an operations update, the company told stock market investors: 'We remain focused on delivering a material UK transaction in the short term,' adding that it is in 'ongoing discussions with multiple UK counter-parties'. The company released the update weeks after abandoning a bid to acquire North Sea-focused Serica Energy, which has a stock market capitalisation of £565m. EnQuest has seen its valuation fall to £212m following a drop of around a third in the price of the company's shares since March amid the volatility triggered by Donald Trump's tariff threats. READ MORE: Israeli-owned firm takes control of UK's biggest gas field Against that backdrop, the company said the windfall Energy Profits Levy was an increasingly unfair burden on firms which could have disastrous unintended consequences. "The recent stepdown in commodity prices has further amplified calls for the UK government to remove the Energy Profits Levy and return the North Sea to a position of global competitiveness,' said chief executive Amjad Bseisu in the update. 'The status quo, which sees the UK as the only country levying a windfall tax on homegrown energy producers, where no windfall profits exist, is resulting in irreversible damage to this strategic national industry and is driving job losses across the sector.' Earlier this month one of the biggest North Sea producers, Harbour Energy, announced plans to shed 250 jobs citing the continued challenging domestic fiscal and regulatory environment. In the update, EnQuest said it had launched a drive to cut costs to boost efficiency 'commensurate with a low commodity price environment'. The company did not elaborate on the implications for jobs in the North Sea operations it runs from Aberdeen. It has been approached for comment. READ MORE: SNP Government oil hypocrisy shocking amid Scottish jobs cull All the same, the update made clear that EnQuest still sees plenty of potential in the UK North Sea. 'We are resolute in our belief that our relative advantages, both operational and fiscal, see us ideally placed as a North Sea consolidator," said Mr Bseisu in the update. EnQuest became a significant force in the area after investing in assets it acquired amid tough times in the industry from firms that appeared to have lost interest in them, such as BP. EnQuest started production from the Kraken field off Shetland in 2017 (Image: EnQuest) The company's directors appear confident that the strategy makes sense amid the current downturn. This may create opportunities to acquire assets on attractive terms. Mr Bseisu's comment highlights the fact that EnQuest has accumulated historic losses that it can use to reduce the tax bills it will have to pay on the profits generated by its North Sea production operations. EnQuest incurred the losses amid moves to increase production from the assets it acquired. This has involved it drilling additional wells to help boost the recovery of reserves from existing fields and developing new ones such as Kraken. The company has continued with the strategy since the windfall tax was first introduced by the former Conservative Government in 2022. Mr Bseisu noted that EnQuest recently increased output from the Magnus field north east of Shetland to the highest level since 2022. The success reflected 'strong reservoir management and good infill drilling results'. EnQuest expects to start production from a further infill well on Magnus next month. The company acquired Magnus and related assets from BP in deals worth $385m in total in 2018, amid the slump in the area that started after oil prices plunged in 2016 as growth in supplies ran ahead of demand. READ MORE: North Sea drilling curb plans look mad amid Trump trade threats EnQuest acquired control of the undeveloped Bressay oil field east of Shetland from Equinor in July 2020 for an initial £2m, following the plunge in oil prices caused by the pandemic. In January EnQuest acquired Harbour Energy's Vietnam business in an $84m (£62m) deal. It has long had a presence in Malaysia. The company said it sees 'significant upside across its existing Asia portfolio, and is in advanced discussions around a further new country entry'. EnQuest made $94m profit after tax in 2024 on sales of $1.2bn. When EnQuest and Serica ended takeover talks early this month the companies said that market volatility had made it impossible to agree the terms concerned. READ MORE: North Sea oil giant plans $500m investor payouts as it cuts jobs Serica announced in March that it was in talks with EnQuest regarding a deal that would have created a company with increased scale, unlocked significant synergies and created a stronger platform for further growth. It was expected then that EnQuest would make an all-share offer for Serica.
The Herald Scotland
22-05-2025
- Business
- The Herald Scotland
Oil and gas workers face ‘unjust transition' with no plan
'Without urgent and ambitious action, investment and Government leadership, Scotland's offshore transition will not take place fairly, with harmful effects on workers, communities, employers and the regional economy of the north east that could otherwise be avoided,' the report said. The independent advisory body warned an unjust transition is possible despite it being known for decades that the North Sea oil and gas sector would decline. Oil and gas workers in Aberdeen told the commission they fear a 'cliff edge' for their livelihoods. Oil and gas workers face a 'cliff edge', the report warns (stock pic) (Image: ANGELA CATLIN) The report said: 'In the context of global economic volatility, the pace and sequencing of the transition will be unjust if determined mainly by turbulent commodity prices. 'The fragmented nature of both the fossil fuel and renewables industries makes effective planning more challenging, but also more critical. 'To avoid harms to workers and communities and support new industry, governments must now take a bold, innovative approach that maximises leverage to set standards, establish pathways, create jobs, and manage shocks.' The commission said more needs to be done to support jobs in the offshore renewable energy sector, including wind, decommissioning and green hydrogen – areas it said are expected to see 'rapid' growth. The expert group said: 'Renewables have a key role to play in delivering a just transition provided robust minimum standards are achieved across the industry for pay, conditions, health and safety regulation and union recognition.' It called for a 'clear plan' to be developed for building up Scotland's renewables supply chain that could help mitigate the job losses seen in the fossil fuel sector. It said oil and gas workers need a 'credible offer' from the Government to retrain in green industries. The 'Just Transition' is seeking to move on from oil and gas (Image: NQ) As well as offshore energy, the report calls on government to take forward proposals for just transition plans to cover all regions of Scotland as well as specific high-emission sites such as Mossmorran and Sullom Voe. The report was launched on Thursday in Aberdeen city centre. The Commission is an independent expert advisory group with members drawn from business, industry, trade unions, environmental and community groups and academia. READ MORE: Israeli-owned firm takes control of UK's biggest gas field Political and fiscal instability leading to 'deindustrialisation' of Aberdeen It aims to make sure the benefits and burdens of the major changes involved in Scotland's climate neutral transition are shared as fairly as possible, and is tasked by the Scottish Government with making an annual assessment of progress towards a just transition to a low carbon economy. Professor Dave Reay, co-chair of the commission, said: 'There's a real risk now that we are looking at a repeat of previous unjust transitions in coal and steel, where a lack of anticipatory planning left workers and communities abandoned at the sharp end of industrial change.' Satwat Rehman, fellow co-chair of the commission, added: 'As the role of oil and gas in the economy of the north east inevitably continues to phase down, we need our governments to work together urgently on a credible plan to support workers whose livelihoods are tied to fossil fuels, from drill crews to caterers, move into new roles.
The Herald Scotland
21-05-2025
- Business
- The Herald Scotland
Rosebank firm buys stake in huge North Sea gas field
The deal will leave Israeli-owned Ithaca with an 85% stake in Cygnus, which it described as 'the largest UK Continental Shelf gas field and a key contributor to the UK's energy security.' READ MORE: SNP Government oil hypocrisy shocking amid Scottish jobs cull Last year Centrica said Cygnus was expected to produce enough gas per day to meet the needs of around 1.9 million UK households. Centrica has highlighted the potential for the field to remain in production beyond 2030. Ithaca Energy's executive chairman, Yaniv Friedman, said the deal would allow the London-listed group to acquire reserves at an attractive valuation and to increase its production in a simple way. The company noted it is paying less than $7 per barrel of oil equivalent to acquire reserves in Cygnus. Brent crude was selling for around $65.30 per barrel in morning trading. The deal is the latest in a series of acquisitions that Ithaca has made in the UK North Sea in recent years. In March Ithaca bought a stake in the giant Seagull oil field from BP in a $193m (£145m) deal. Ithaca cemented its standing as one of the biggest North Sea producers in April last year when it acquired the bulk of Italian giant Eni's interests in the area for around £750m. READ MORE: North Sea drilling curb plan looks mad amid Trump trade threats Israel's Delek Group was left with a 50.4% stake in Ithaca following completion of the deal, with Eni on 38.7%. Six months later the Labour Government sparked outrage in the industry by increasing the rate of the windfall tax. Ithaca has made a range of expansion moves in the North Sea since the tax was first imposed in 2022. The following year the company approved plans to develop the bumper Rosebank field West of Shetland with Equinor of Norway. The project faces uncertainty after Scotland's Court of Session ruled in January that the former Conservative Government was wrong to approve the development. This was because the assessment process failed to take account of the emissions that would be generated by use of the related output. The Labour Government is working on a new assessment process. READ MORE: North Sea oil giant plans $500m investor payouts as it cuts jobs Ithaca also hopes to develop the huge Cambo field West of Shetland. Environmental campaigners are bitterly opposed to the plans for Rosebank and Cambo. Centrica built a big North Sea production business, called Spirit Energy, helped by the £1.3bn acquisition of Aberdeen-based Venture Production in 2009. The group decided to offload its North Sea exploration and production operations to focus on other markets, including the supply of energy to households. Centrica plans to develop a huge carbon storage facility in depleted gas reservoirs beneath Morecambe Bay. The group said the Cygnus deal would generate around £215m benefits in total including the transfer of £99 million of decommissioning liabilities associated with the interest. Centrica will retain a 15% stake in Cygnus following the deal. Cygnus is in the Southern North Sea 120 miles off Lincolnshire.
The Herald Scotland
20-05-2025
- Business
- The Herald Scotland
Israeli-owned firm takes control of UK's biggest gas field
The deal will leave Israeli-owned Ithaca with an 85% stake in Cygnus, which it described as 'the largest UK Continental Shelf gas field and a key contributor to the UK's energy security.' READ MORE: SNP Government oil hypocrisy shocking amid Scottish jobs cull Last year Centrica said Cygnus was expected to produce enough gas per day to meet the needs of around 1.9 million UK households. Centrica has highlighted the potential for the field to remain in production beyond 2030. Ithaca chief executive Yaniv Friedman said the deal would allow the London-listed group to acquire reserves at an attractive valuation and to increase its production in a simple way. The company noted it is paying less than $7 per barrel of oil equivalent to acquire reserves in Cygnus. Brent crude was selling for around $65.30 per barrel in morning trading. The deal is the latest in a series of acquisitions that Ithaca has made in the UK North Sea in recent years. In March Ithaca bought a stake in the giant Seagull oil field from BP in a $193m (£145m) deal. Ithaca cemented its standing as one of the biggest North Sea producers in April last year when it acquired the bulk of Italian giant Eni's interests in the area for around £750m. READ MORE: North Sea drilling curb plan looks mad amid Trump trade threats Israel's Delek Group was left with a 50.4% stake in Ithaca following completion of the deal, with Eni on 38.7%. Six months later the Labour Government sparked outrage in the industry by increasing the rate of the windfall tax. Ithaca has made a range of expansion moves in the North Sea since the tax was first imposed in 2022. The following year the company approved plans to develop the bumper Rosebank field West of Shetland with Equinor of Norway. The project faces uncertainty after Scotland's Court of Session ruled in January that the former Conservative Government was wrong to approve the development. This was because the assessment process failed to take account of the emissions that would be generated by use of the related output. The Labour Government is working on a new assessment process. READ MORE: North Sea oil giant plans $500m investor payouts as it cuts jobs Ithaca also hopes to develop the huge Cambo field West of Shetland. Environmental campaigners are bitterly opposed to the plans for Rosebank and Cambo. Centrica built a big North Sea production business, called Spirit Energy, helped by the £1.3bn acquisition of Aberdeen-based Venture Production in 2009. The group decided to offload its North Sea exploration and production operations to focus on other markets, including the supply of energy to households. Centrica plans to develop a huge carbon storage facility in depleted gas reservoirs beneath Morecambe Bay. The group said the Cygnus deal would generate around £215m benefits in total including the transfer of £99 million of decommissioning liabilities associated with the interest. Centrica will retain a 15% stake in Cygnus following the deal. Cygnus is in the Southern North Sea 120 miles off Lincolnshire.
