The collapse of Petrofac’s holding company has sparked a wave of political blame — but the real story lies in years of global missteps and a faltering energy transition, says Brian Wilson
It is not exactly a secret that there is a long back-story to the problems of Petrofac, the energy construction and facilities group which employs more than 8,000 people around the world including 2,000 in the UK – many of them in Aberdeen.
As two minutes research on Google would have revealed to Mr Stephen Flynn, the permanently apoplectic SNP leader at Westminster, the Petrofac problems have nothing at all to do with the policies of the UK Labour government in relation to the North Sea.
As I shall return to, I am well on the record as a friendly critic of these policies – right back to the days when Mr Flynn and his colleagues were hand in hand with the Greens who could not shut down the North Sea quickly enough.
But I also have an inclination to check facts before opening my mouth, not least where people’s jobs and the concerns of their families are involved. In that context, Mr Flynn’s behaviour this week was a disgrace which should not be readily forgotten.
The Petrofac tale of woe has evolved over years and includes a big bribery and corruption case in the Middle East, massive losses on a construction contract in Thailand and, most immediately, the collapse of an offshore wind contract in Holland. None of these is the responsibility of any UK government.
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Nonetheless, enthused by the news that “Petrofac” had gone into administration, Mr Flynn and also the Shadow Secretary of State for Scotland, Andrew Bowie MP, took to the airwaves to in attribute these difficulties to the sins of Labour. Political vultures don’t care about facts or families, if they smell prey.
In the Commons, responding to an urgent question from Mr Bowie, the Energy Minister, Michael Shanks, spelt out the factual truth: “Contrary to misleading reports”, he said, “the UK arm of Petrofac has not entered administration and is continuing to operate as normal — as an in-demand business with a highly skilled workforce and many successful contracts.
“Today’s announcement covers only the top-level holding company Petrofac Ltd, which has no employees”.
This, one might have thought, should have conditioned the follow-up questions. Surely, at that point, the interests of all MPs should have been in reinforcing the message that it was “business as usual” at Petrofac UK and, as in all such situations, the shared objective must be to secure a successful outcome which preserves the UK jobs?
Not a bit of it. Messrs Bowie and Flynn were not be denied their bad news moment or the crude attempt to pin blame. Not a word of relief around the fact that UK jobs are not affected, far less of solidarity with Mr Shanks on the need to secure a buyer who will, as hoped, take over the North Sea business.
The Minister, I think, was genuinely shocked. “All of us across the House”, he said, “have a responsibility to support the company at the moment, not to undermine it, and to send a positive message to those workers, the suppliers and the customers that the UK arm is continuing to operate as normal. All the signs are that there is a viable long-term future for the company”.
I hope he is right and that those who, out of ignorance or malice, rushed to dance on the grave of Petrofac UK will think twice about their own behaviour. In his sanctimonious way, John Swinney joined the pile-on by sharing the “incredibly concerning news” about “Petrofac”, linking it to “the UK Government” while the Scottish Government “stands ready to support”.
Either he knew and pretended otherwise, or did not know and should have, the distinction between Petrofac the holding company and Petrofac UK, the major Scottish employer. Instead of tweeting, Mr Swinney should have been in the front line of explaining the distinction, in order to allay – not foster – the concerns of employees and their families.
There is no need to invent bad news when the facts speak for themselves. The transition to renewables is not delivering jobs at the pace required to compensate for decline in the North Sea. That has been happening for years and certainly has not been helped by the additional uncertainty which government policies and pronouncements have contributed.
I find no difficulty saying that because it has been my position all along. In order for there to be a just transition, there have to be jobs to transition to. The argument should never have been about the principle of an energy transition rather than the need to balance the timing in a way which recognises realities rather than fanciful targets and wishful thinking.
As the Herald reported this week, renewables are producing one job for every £1 million invested as opposed to 14 in oil and gas. As the STUC commented: “These figures pose a real challenge for the Scottish Government which has predicated much of its strategy on renewable energy and offshore wind”. And they don’t have a clue how to meet it.
These truths are, I hope, now sinking in and we will see policies which more obviously respect the need to maintain a healthy North Sea sector for as long as we need oil and gas. Approval for the Rosebank field would be a significant step in that direction and the Budget should hold out an olive branch to the industry.
I have never wavered from belief in a balanced energy policy which includes oil and gas for as long as we need them, renewables and also nuclear. Adopt an extreme position on any one of these and the problems soon reveal themselves. Energy policy should be far more about common sense than ideology.
In Scotland, that seems impossible. Mr Flynn thinks shouting loud enough makes his own party’s still recent record on the North Sea go away while also opposing anything with the word “nuclear” in it. None of that is common sense.
And incidentally, he might also take note of the fact that it was the failure of an offshore wind contract which tipped Petrofac (holding company) over the edge – another hint at why it is not clever to put all our eggs in that basket either.
