AFTER a very long wait, the announcement last week of a North Sea Transition Deal sent campaigners into a fury while leaving industry champions feeling the importance of the sector had been recognised.

The Government reckons the deal could help unlock £16 billion investment and support 40,000 jobs as the expertise developed in the North Sea oil and gas industry is harnessed to help the UK achieve its net zero ambitions.

For all the big numbers and visionary content, however, the deal may only offer a promise of jam tomorrow for an industry in crisis.

The deal that was announced followed months of talks that took on increasing urgency as the North Sea industry plunged into a deep downturn.

READ MORE: North Sea oil firm to cut more than 500 jobs as it calls time on fields

The Government said the deal delivered on a manifesto commitment that was made in 2019 but the outlook for the industry has become much bleaker since then.

Firms in the wider North Sea supply chain are reckoned to have shed 30,000 jobs amid the pandemic. Many slashed spending in response to the plunge in demand for oil and gas triggered by the coronavirus.

Industry body OGUK stepped up calls for help for a sector that supports 147,000 jobs warning the country could be left worryingly dependent on imports if the Government did not act. It wanted support that would keep enough firms alive to ensure the country maximised the potential to develop clean energy sources such as windpower and hydrogen fuel along with carbon capture and storage facilities in the North Sea.

OGUK faced challenges in its efforts to win broader support amid growing calls for oil and gas activity to be curbed to help tackle the threat of climate change.

Campaigners went into overdrive when the Government combined the announcement of the North Sea Transition Deal with confirmation that new oil and gas licences could be awarded in future.

The Government said future licenses would only be granted on the basis that they are compatible with the UK’s climate change objectives. It promised to introduce a “dynamic checkpoint” system this year, which will enable the assessment of ongoing domestic need for oil and gas, while expecting concrete action from the sector on decarbonisation. “If the evidence suggests that a future licensing round would undermine the UK’s climate goals or delivery of Net Zero, it will not go ahead,” warned the Government.

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But Friends of the Earth Scotland said the decision exposed the outrageous hypocrisy inherent in the Government’s approach to the climate emergency.

“The science on this is already crystal clear, burning fossil fuels is the key driver of this crisis so to avoid climate breakdown there can be no new licences and existing production must be wound down over the next decade - a new ‘climate compatibility checkpoint’ isn’t going to change that reality,” said Friends of the Earth Scotland’s Just Transition Campaigner Ryan Morrison

Greenpeace said the refusal to rule out new oil and gas licences was a colossal failure in climate leadership in the year of the COP26 climate talks, which will be held in Glasgow in November.

“Instead of finding ways to prop up this volatile and polluting sector, a better proposition for workers and communities would be for the government to confirm a ban on new licences, and put all its energies into a nationwide programme of retraining, reskilling and investment in renewables and green infrastructure,” said Mel Evans, head of Greenpeace UK’s oil campaign.

Neither group appeared to be mollified by the fact the key outcomes the transition deal is meant to help deliver are listed under headings that include the decarbonisation of offshore oil and gas production operations, the transformation of the supply chain and people and skills development.

HeraldScotland: OGUK chief executive Deirdre Michie Picture: OGUKOGUK chief executive Deirdre Michie Picture: OGUK

North Sea industry leaders welcomed the deal.

OGUK chief executive Deirdre Michie said it would ensure the industry builds on five decades of offshore energy expertise to deliver to the UK the energy and security it needs, whilst significantly reducing emissions.

She noted: “Through government and industry working together we can make the UK a world centre of cleaner energy innovation that attracts investment, creates a new generation of jobs in areas that need them most and, importantly, hits these tough emissions targets that industry and government have signed up to.”

Aberdeen-based oil services heavyweight Wood said the deal would help cement the United Kingdom Continental Shelf’s position as an integrated energy hub at the forefront of the energy transition.

Craig Shanaghey, operations president at Wood, said: “By focusing on investment in decarbonisation, the development of cleaner energies and support for jobs, the Deal provides a catalyst for innovation, collaboration and future growth.”

The comment highlights the fact the other key outcomes the deal targets are the development of Carbon Capture and Storage and of Hydrogen fuel production facilities on the scale that will be required to achieve emissions reductions targets.

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Reading through the deal, it is clear that a huge amount of thought has gone into these two areas, with a range of policy initiatives in the pipeline.

It often seems to be taken as read that the North Sea could become a major centre for CCUS because there are depleted fields in the area along with pipelines and related infrastructure that could be repurposed. These could be linked to facilities that could produce so-called blue hydrogen from North Sea gas.

The text of the deal underlines just how much needs to be done if the potential of CCUS and Hydrogen are to be realized.

It notes that for the majority of industrial sectors, CCUS is not yet a viable investment. The market currently does not provide a sufficiently robust price signal to make industrial carbon capture viable.

The deal adds: “The government will therefore design and implement a business model to provide revenue support and improve companies’ confidence for investing in carbon capture solutions.” It will aim to finalise a new commercial framework by 2022.

READ MORE: Oil giants show faith in potential of UK carbon capture and storage projects

The Government will bring forward detail on preferred hydrogen business models and the revenue mechanism to stimulate private investment in new low carbon production facilities. It will finalise business models in 2022.

Sections like these suggest any boom in supply chain activity around CCUS and hydrogen may be a way off.

The deal warns: “Whilst the commitments in this Deal are undertaken in good faith, we recognise the wide range of uncertainties that may impact on delivery.”

With that in mind, it is striking that the deal does not seem to involve any new funding commitments on the part of the Government. It plans to draw on funding programmes that have already been announced such as the £1bn committed through the Carbon Capture and Storage Infrastructure Fund.

There is nothing in the deal that appears designed to provide the kind of short term boost the supply chain needs.

READ MORE: Experts warn - 25,000 North Sea jobs at risk amid rise of robots

The Government may have felt the pressure was easing on oil and gas firms following the rise in crude prices since November, which has accompanied the rollout of coronavirus vaccines.

However, the rally has faltered in recent weeks following rises in infection rates in some European countries.

Sections of the North Sea supply chain have been under intense pressure for months. The coronavirus furlough programme which has provided vital help for firms to protect jobs is due to end in September.

Scotland’s Just Transition commission has highlighted the need to ensure people and communities in Scotland do not get left behind by changes in the energy world.

Against that backdrop sector watchers will be concerned about what has happened in the offshore wind sector.

READ MORE: SSE boss defends energy giant's treatment of Scottish supply chain amid windfarm row

Investment in offshore wind is booming. However, two years after the UK Government announced an Offshore Wind Sector deal, a surge in w indfarm activity has not produced the expected boost to employment in Scotland.