Oil and Gas and Energy Transition Strategic Leadership Group minutes: February 2021

Attendees and apologies

• Minister for Energy, Connectivity and the Islands
• Andrew Ritchie (in place of Steve Phimister), Shell
• Andy McDonald (in place of Linda Hanna), SE
• Andy Samuel, Oil & Gas Authority
• Arne Gürtner, Equinor
• Audrey MacIver, HIE
• Colette Cohen, OGTC
• Craig Shanaghey, Wood
• Deirdre Michie, OGUK
• Elizabeth Rattray, Aberdeen University
• Emeka Emembolu, BP
• Gareth Raymond (in place of Andrew Gardner), INEOS
• Gordon McGuinness, SDS
• Ian Donald, Subsea
• Jake Molloy, RMT
• Jill Glennie (in place of John McDonald), OPITO
• Jim Savege, Aberdeenshire Council
• John Boland, Unite
• John Pearson, Petrofac
• Melfort Campbell, IMES Group
• Mike Smith, NECCUS
• Murdo MacIver, One Peterson
• Paul de Leeuw, RGU
• Peter Black, Energysys
• Richard Knox, EC-OG
• Rozanne Foyer, STUC
• Sian Lloyd Rees, Aker
• Terry Savage, GE Group
• Trevor Garlick, ONE

Guests

• Minister for Trade, Innovation and Public Finance
• David Rennie, SDI
• Gordon Stirling, OCA
• Helena Charlton, BEIS
• Reuben Aitken, SDI
• Sir Ian Wood, ONE

Observers

• Craig McMillan, Scottish Government
• Dinker Bhardwaj, Scottish Government
• Duncan Stalker, Scottish Government
• Emma Stewart, Scottish Government
• Gavin MacKay, HIE
• Gwen Folland, Petrofac
• Isabella Gerber, Oil & Gas Authority
• Jenny MacDonald, SDS
• Kevin Taylor, SE
• Sonja MacMillan, SE
• Stuart Payne, Oil & Gas Authority

Items and actions

Ministerial opening remarks

The Minister welcomed everyone to the 9th meeting of the SLG group

The Minister thanked everyone for their support over the last 2 months and particularly of note was the Energy Transition Fund which came out of discussions last year.

The Minister noted the busy agenda and highlighted the change to the format of the meeting to accommodate Mr McKee’s diary to allow him to participate in discussions on Scotland’s Trade Vision.

There has been a significant period of change with the ramping up of the vaccine rollout across Scotland as well as the UK and Europe.

This week brought the introduction of the new quarantine arrangements for international travellers which will be covered Mr McKee. Recognition given that there will be a wealth of views on the matter and input has been provided from OGUK and individual businesses. The necessity for the new quarantine measures is to avoid the risk of importing new variants of particular concern are those in Brazil and South Africa. To give vaccine deployment best chance of bringing us closer to normality, these limits on international travel are necessary. Clinical advice is clear that a comprehensive system of managed quarantine is essential to minimise the impact of new COVID-19 variants. Appreciation of difficulties for individuals and the sector and exemptions will covered later in the meeting although noting that number of exemptions must be restricted.

Hydrogen Policy Statement published on 21 December 2020 and we are first of UK nations to publish a statement. The Statement was published alongside hydrogen assessment report. There was also a Climate Change Plan update where the Emerging Energies Technology Fund was announced with £180m of Scottish Government support, £100m dedicated to Hydrogen and £80m towards CCUS and other emission reducing technology.

Contributing to the Marine Scotland/Crown Estate Scotland review of the ScotWind leasing round. Delighted there is strong interest from the likes of BP, Total and Equinor.

Vision for Trade announcement was made in January. Sets out the principles which will underpin the trading and investment relationships we want Scotland to have now & in the future. Following the announcement it was felt to be important to spend some time discussing it this morning and have invited Mr McKee and colleagues to clarify the process and outline next steps.

Trade vision

The Minister warmly welcomed Ivan Mc Kee, Minister for Trade, Innovation and Public Finance to the SLG to provide an update on Vision for Trade.

Mr McKee thanked the Minister for inviting him to the SLG to talk about Scotland’s Vision for Trade. He echoed the comments made about the great potential that the energy sector offers for trading prospects.

The Vision sets out the principles for the type of trading relationships we want Scotland to have now and in the future and how Scotland will continue to support free and fair trade. There are 5 principles at the heart which will be guide on future decisions on international trade: Inclusive Growth; Wellbeing; Sustainability; Net Zero; and Good Governance.

Want Scotland’s economy to grow and be globally competitive, entrepreneurial, inclusive and sustainable. We will work to influence the trading environment to maximise our competitive advantages and improve market access for our businesses in goods and services sectors. We will do this in a coherent and strategic way by supporting traders to navigate preferential trade terms in Free Trade Agreements, and in so doing drive up the utilisation of such agreements.

Will use our trade principles to increase wellbeing and opportunity through trade, while reducing inequality. Need to understand better the differential impacts of trade across our society, particularly to advance our fair work agenda. We can do this by ensuring our labour market, education, skills and regional development policies consider trade’s impacts.

We will use trade as a lever to drive progress towards our climate change targets and improve our international environmental impact. An example of this, is our commitment to end all overseas trade support and promotion activities solely focused on fossil fuel goods and services by the time of the COP26.

We will consult with industry, on the detail of our proposal, and there will be legitimate exemptions where it is clear that the work is essential for a fair and just energy transition. Not about removing support from any one business or any one sector, this is about us choosing what goods and services exports we provide Government support to. This announcement does not reduce our overseas trade support and promotion activities, it refocuses them to create more coherence between our trade and climate policy.

We are interested to hear your priorities for the energy export transition. What can we do to help you export more in renewable and low carbon goods and services?

David Rennie, SDI’s Head of Global Energy Trade provided an overview of what SDI are responsible for and the team structure. Majority of resources spent working with larger exporting companies.

Data requested from 300 O&G companies on their approach to energy transition. Responses received from 180 so far and findings were presented to the group. Further analysis on data is ongoing.

SDI team are developing a change plan in light of the announcement, focus will be on energy transition and non-fossil fuel agenda. Looking at what the team currently do and what they may be doing in the future. Will be discussing implementation of commitment with Global Scots. Any comments/contributions can be shared with David if not covered during meeting.

Reuben Aitken introduced the open discussion session. Reiterated what the Ministers had said that they are fully committed to working with the sector to align principles and make most of expertise.

Will return to next meeting with a guidance document on scope and exemptions of the policy. 3 Industry workshops will be held over March/April to discuss/test the exemptions. Written feedback can also be submitted by 23 April.

Mr Wheelhouse invited the group to ask any questions/raise comments either by raising hand or utilising the chat function. Query was raised regarding input from universities, confirmed that they will certainly form part of the consultation.

Concerns were raised that the proposal may not give end result that is hoped. Reducing SME support overseas will reduce ability to contribute to net zero overseas. If support is withdrawn other companies will step in and take over. The end result needs to be carefully considered.

Mr McKee clarified it was a refocusing of resource onto energy transition and renewables. Companies can continue to trade.

OGUK thanked Mr Wheelhouse for the letter reinforcing the role of the sector in energy transition which will be shared with members. Will be happy to engage with SG on the exemptions and timings. Important to have consistency with UK.

Concerns were raised by the group around the language used and that it may have unintended consequences. Invest ability angle needs to be considered.

Mr McKee thanked members for their time and input and noted the points made, the consultation will give opportunity to discuss the detail.

Mr Wheelhouse thanked Mr Mckee and his officials for their time and will take away the issues around pace and timing. Aware of the importance of the knowledge and expertise of the sector.

Action: Reuben Aitken will provide guidance document for next meeting on scope and exemptions to policy.

SLG update

Mr Wheelhouse noted the dashboard and actions that were circulated in advance of meeting. Commitment at meeting in July for meeting with OGUK to discuss asymptomatic testing. Discussions on this are still ongoing.

Ask from OGUK to consider vaccine prioritisation for sat divers. Further ask for workers to self-isolate at home and not enter managed quarantine. This was echoed by Union officials as workers are now reluctant to travel. This was acknowledged by Mr Wheelhouse and the impact on mental wellbeing. Mr Wheelhouse reassured members that points made were acknowledged and this was being actively looked at without undermining the overall aim.

Data received from OGUK on sat divers numbers has been shared with health colleagues to help inform any future decisions on vaccine programme.

Mr Wheelhouse received information from health colleagues on double testing regime. If sector testing is in-line with private testing guidance then there could be a possible exemption. If this is not compliant then individuals will have to continue with the 2 tests.

Clinical guidance on managed isolation is that this is still required and should be factored into travel arrangements. Mr Matheson may come back on this. Need to be assured that measures prior to travel are sufficient to prevent further contact with other streams of the virus.

Mr Wheelhouse noted the need to prevent divers becoming infected and how seriously this is being taken by the sector. This has been raised with SG and UK Gov and suggested taking conversation offline.

Peer to Peer Platform is still in pilot stage. Expected to roll into final programme in next few weeks.

Minutes from previous meeting cleared.

SEAB met on 17 December co-chaired with Sir Jim MacDonald. Climate Change Plan Update published on 16 December. Annual Energy Statement on 18 December. Hydrogen Policy Statement 6 January. Sue Cairns held session on Heating Building Strategy and this has now been published. Heat Networks Bill on 23 February.

Action: Jim Savage to engage with OGUK and Union officials on diver prioritisation.

Co-chair meeting update

Melfort Campbell provided an update on the SLG Co-chairs meeting on 8 February. Leading conversation was on consumers & the role they have in preparedness for paying more for energy. Wide stakeholder base has a number of roles.

Discussion on how we categorise stakeholders. Huge number of vital people who are not willing to pay more and do not like oil and gas, windmills & don’t understand work that is being done. How to be communicate with them appropriately?

Role of stakeholders driving sentiment was discussed and the Trade Vision announcement. Language is an issue, need to consider industry, cross industry & political communication. Proposing to hold an accelerated meeting to discuss these issues. Sentiment is going to drive behaviour.

The Minister thanked Melfort and noted the importance of the group. Formal request was made to change the statutory remit of Ofgem to reflect the climate emergency.

Big focus on energy skills partnership, developing talent pipeline to support a Just Transition. Looking at how SOWEC can engage with Trade Unions on skills element.

The group noted the letter Opito. Want to see a move away from competing standards bodies. Would like to see a timeline of action. Opito are in discussions with standards bodies & will come back with an action plan & timescales.

Industry updates

Mr Wheelhouse invited John Pearson and Deirdre Michie to provide Industry Updates.

John Pearson updated on the Supply Chain Taskforce. Started off on export strategy with work around growth & diversity & maintaining capability. Then looked at survival & short-term things. Aware lot to be done on short-term actions.

Need to balance decline in oil & gas & drive investment in new energy sources. Will await NSTD & consult with stakeholders.

Taskforce feel like making good progress but are others aware of progress. Have made something happen that would not normally have happened. Pathfinder tool is being updated. Looking at frictionless tendering, 3 workshops arranged to try & unlock some thinking around that.

Good progress on getting companies to sign up to ensure that payments are made promptly.

Deirdre Michie was invited to update on industry and the NSTD. Deirdre reminded the group that the sector is still very fragile & challenging. Although oil price has risen cash flow remain a challenge & budgets are under pressure. Critical we don’t lose jobs & get people back to work. Believe job losses near to 12,000 but need clarity.

Made formal submission on NSTD & in negotiations with UKG. Need to sustain this sector. The deal will be a catalyst & need to move at pace to ensure we meet targets set by SG & UKG.

The deal is 5 inter-related commitments. Looking to reposition supply chain into an all energy supply chain. People & skills underpins everything.

Opportunity to create jobs & stimulate significant investment. Will require all parties to put money on the table. Want country to be a driver.

3 negotiation sessions with BEIS & going through clarification conversations with them.

UKG echoed Deirdre’s points & confirmed working with OGUK and useful discussion are underway. Continue to work at pace.

Mr Wheelhouse noted how great the opportunity was and was pleased to see focus on CCUS as another Just Transition opportunity for the sector.

Scottish industry cluster net zero roadmap project

Mike Smith was invited to provide an update on the Scottish Industry Cluster Net Zero Roadmap Project.

One of 6 regions in UK 10 point plan. Aiming to address East Coast of Scotland, covering over 30 sites.

NECCUS is leading with a significant number of partners. Industry will be main user of CCUS products.

Project starting now & through next 2 years. Ask for support from group on how this should be delivered & will come back on 6 monthly basis to group to update.

Mr Wheelhouse thanked Mike and noted the importance & asked that a more focused discussion is provided to the group in the future.

Ministerial summary/reflections

The Minister advised no date confirmed for next meeting but anticipate it will be mid-June.

SLG engagement for COP26, an ask for the group to consider how to contribute through evidence and showcasing what stakeholders and industry partners are doing now and what opportunities they have. Reminder for members to consider what information they can share with Scottish Government, in terms of case studies & other examples of how companies & the sector is supporting a just and sustainable energy transition.

Action from December for Opito to update & paper circulated in advance of the meeting.

Instant chat messages

[9:08 AM] Gordon McGuinness (Guest)

Apologies, was caught up on a Brexit session with the Business Organisations and trade bodies

[9:12 AM] Wheelhouse P (Paul), MSP

No problem, Gordon. Glad to have you with us.

(1 liked)

​[9:21 AM] Wheelhouse P (Paul), MSP

Following David's piece we will move to input from Reuben Aitken on next steps on the engagement with the sector on the vision and then there will be an open discussion, so we will bring any questions in then.

[9:32 AM] Paul de Leeuw (eti) (Guest)

Great if universities can be included in the forward SDI plans. Universities are supporting the full range of energy activities and benfit greatly from ongoing SDI support.

(1 liked)

[9:32 AM] Wheelhouse P (Paul), MSP

Paul - will bring you in after Reuben.

[9:33 AM] David Rennie (SDI Energy) (Guest)

good point Paul thanks

[9:37 AM] Wheelhouse P (Paul), MSP

Sir Ian - I will bring you in after Paul De Leeuw.

[9:39 AM] Wheelhouse P (Paul), MSP

Dierdre - will bring you in after Sir Ian.

[9:40 AM] Rattray, Elizabeth (Guest)

Universities also very supportive and working with Universities Scotland and Scottish government colleagues on the the vision with some grate examples starting.

[9:40 AM] Wheelhouse P (Paul), MSP

apologies for typo Deirdre!

[9:41 AM] Wheelhouse P (Paul), MSP

Will bring you in after Deirdre, Colette.

[9:43 AM] Melfort Campbell (Guest)

Wholly agree with Sir Ian. the ability to diversify is based on investment, which can only come from trading profits which will for a time can only come from oil and gas trade.

(3 liked)

[9:44 AM] Wheelhouse P (Paul), MSP

Will bring John Pearson in after Colette.

[9:46 AM] Phil Simons (Guest)

like many contractors our work in the rennewables sector is supported by our O&G work and more importantly with the reduced activity in the UKCS our O&G activity overseas.

[9:47 AM] Terry Savage (Guest)

Sir Ian's points are very well made and we need to manage the transition at a realistic pace, as too many are wanting to turn their backs on a vital part of the long term strategy of the 'Global Energy' Mix'

(1 liked)

[9:52 AM] Melfort Campbell (Guest)

Colette has articulated a key point. there is wide support for the what, real discomfort on how, timescale and the communications.

(1 liked)

[9:53 AM] SHANAGHEY, Craig (Guest)

Colette makes a great point on the potential contradiction, at a real important time for our industry as we demonstrate how key our role is in the Energy Transition

(2 liked)

[9:54 AM] Phil Simons (Guest)

the marked increase in rennewables activity is not seen by the supply chain until 2025. If we abandon our O&G supply chain to earlier then we will risk losing our capability and more importantly our skilled workforce

(1 liked)

[9:56 AM] Melfort Campbell (Guest)

Whilst there is a real concern with the announcement, there is a real appetite to work with the SG over how we progress to Net Zero with intelligent conversations on the position of oil and gas in that context.

(1 liked)

[9:57 AM] Rozanne Foyer (Guest)

In case not time to speak on this its very important that fair work principles acknowledged to be at the heart of this vision. If Oil and Gas is seen as supporting a Fair Work approach and a fair transition for the workers that too is good for the branding and attractiveness of the industry in SC.

[9:59 AM] Lloyd Rees, Sian (Guest)

The technology advances we are making today in O&G form the basis for the differentiated solutions we are starting to sell into the energy transition. It is a key enabler for the UK O&G supply chain to successfully transition

(6 liked)

[10:00 AM] Unknown User Ivan McKee (Guest) left the conversation.

[10:00 AM] Emembolu, Emeka (Guest)

I would like to add is that the skills in the existing O&G supply chain are the exact same skills we (bp) will be adapting for transition. Offshore Wind in many cases is analogous to Offshore O&G but without the hydrocarbons. The task of transition will be infinitely harder if we do not retain the skills and capacity from Scottish industry. The risk we run is needing to import talent that could have been homegrown to achieve the task ahead.

(5 liked)

[10:03 AM] trevorgarlick.home (Guest)

SG pledge to write a Guidanc doc for Suply chain with exemptions agreed

[10:03 AM] trevorgarlick.home (Guest)

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[10:03 AM] trevorgarlick.home (Guest)

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[10:09 AM] Rozanne Foyer (Guest)

That's helpful thanks

(1 liked)

[10:13 AM] Arne Gürtner (Guest)

In order to keep activity levels in the industry, international mobility i key. THe industry has applied numerous measures, incl. PCR testing, to mitigate infection risks.

[10:29 AM] Gordon McGuinness (Guest)

I need to drop from the call, Jenny Macdonald is also on the call for any SDS related issues. Thanks

​[10:29 AM] Deirdre Michie (Guest)

Meforts comments re sentiment are spot on -we have been working on a significant stakeholder engagement project at OGUK that is gathering data as to how and whom we speak to and with what messages and with the right language as per Colettes comment. Very happy to come back to the next SLG with an update on that and also ask for support from this group on this

(2 liked)

[10:34 AM] Melfort Campbell (Guest)

This is really important and vital OGUK lead. we also touched on the importance of other sectors being on message on oil and gas, advocacy of the broad perspective across the sector, if cohesive would have greater effect and achievement.

(2 liked)

[10:35 AM] Unknown UserGordon McGuinness has left the meeting.

​[10:56 AM] Rozanne Foyer (Guest)

Sorry need to leave have another call at 11 am. Thanks for all the info / updates.

​[10:57 AM] Wheelhouse P (Paul), MSP

Thanks. Roz, for your input. Much appreciated, as always.

​[10:57 AM] Raymond, Gareth (GRA) (Guest)

I also have to drop out for an 11AM call. Appreciate all the information shared today.

​[10:58 AM] John Pearson (Guest)

My apologies, I also need to leave for another call. Good session. JP

​[10:58 AM] Wheelhouse P (Paul), MSP

Thanks, John. Sorry to have overrun, but thanks for your great inputs. All the best. 

[11:02 AM] Phil Simons (Guest)

apologies i have to leave. thanks

​[11:03 AM] Emembolu, Emeka (Guest)

Thanks everyone. Helpful session.

​[11:03 AM] Charlton, Helena (Energy Development & Resilience)

Many thanks for a very useful and informative meeting. I have to leave for another meeting.

​[11:04 AM] Colette Cohen (Guest)

Thank you Minister - very interesting session today. Have to go.

​[11:04 AM] Arne Gürtner (Guest)

Thank you Minister and colleagues. Many good and important discussions today.

​[11:05 AM] Terry Savage (Guest)

Excellent dialogue today and well chaired Minister. Thanks all.

​[11:05 AM] Deirdre Michie (Guest)

Thank you - good meeting -appreciate it!

[11:05 AM] Ritchie, Andrew R SUKEP-ERD (Guest)

Thank you. Helpful discussion.

[11:06 AM] David Rennie (SDI Energy) (Guest)

thanks all

​[11:06 AM] Jill Glennie (Guest)

Thank you - good session!

[11:06 AM] Kevin Taylor (Guest)

Thank you, good points raised!

[11:06 AM] SHANAGHEY, Craig (Guest)

thank you Minister and all for engaging discussion

[11:07 AM] Gordon Stirling (Guest)

Thanks to all for excellent and broad-ranging discussion